While the video addresses some points, it completely omits places where cap and trade has worked, suck as The Acid Rain Program and NOx Budget Trading Program.

I think that no one can disagree that implementing a multi-national cap and trade program is difficult. The EU Emissions Trading Scheme was imperfect, but I'm not convinced that we should all hedge our bets on a carbon tax as the only way to reduce carbon emissions. There's a very detailed and well-written article on things that the cartoon leaves out by David Doniger of the Natural Defense Resource Council: http://switchboard.nrdc.org/blogs/ddoniger/the_rest_of_the_story_of_cap_a.html.

I hope no one who watches this comes away thinking that cap and trade is as horrible as Annie suggests. In fact, the strictly punitive prescription she offers as an alternative would be rather counterproductive.

First, a GLOBAL cap and trade system is neither necessary nor desirable. Carbon markets function much better when implemented regionally, allowed to grow, adapt, and merge gradually, like currency markets. The Western Climate Initiative - made up of over a dozen states and provinces in the US, Mexico, and Canada and set to launch a trading system in January 2012 - could serve as an excellent (if perhaps belated) example to the rest of the US.

Second, Annie's "devils in the details" are examples of loopholes that should not be used to denigrate the entire system. False offsets and credit giveaways would weaken the system of course. But they are loopholes; cite them for removal, don't use them to discredit the whole system.

Third, the alternative Annie suggests, one in which industry is simply punished for emitting carbon, is counterproductive. Technologies for generating and distributing alternative energy do not just appear out of the ground. Many of the same fossil fuel companies are the ones investing in renewables. In fact, Enbridge Inc., the company responsible for the recent one million gallon oil spill in my home state of Michigan is also behind a huge solar initiative set to be launched later this year. Oddly, it is the profits from fossil fuels which have helped these companies to invest R&D in alternative energy.

In her oversimplification Annie conjures up images of fat cat oil tycoons simply looking for ways to make millions off the climate crisis, and do nothing. No doubt, there are elements of truth to this. But we, the energy consumers, are just as responsible for the climate crisis in our own use of fossil fuels. If we really want to make a difference in the climate crisis, we need to look beyond punitive actions, and incentivize the energy transition.

Sigh. Agreement with Dan and others here. I can't tell if Leonard intends to be objecting to this specific implementation of cap-and-trade, or cap-and-trade as a basic concept, but the video sure comes off as the latter rather than the former. However, her objections are very shallow, and the video doesn't make the point she hopes it does, to anyone who's a little bit informed on the topic -- it just shows how much she is missing the entire point.

If anything, this video is a great "sociological image" of how otherized, and really, demonized these "Wall Street fat cat" types are. A number of my friends work as traders and they are brilliant, benevolent people (incidentally often young, thin and sprightly rather than old, fat and cigar-smoking, not that I'm judging) who love their jobs because they see it as an opportunity to solve fascinating puzzles all day long. They are not evil, money-grubbing meanies looking to kick poor people in the face.

And more importantly, that isn't what they're doing. Having a market for something doesn't ruin everything about that something and set us up for a catastrophe automatically. Perhaps Annie Leonard would like to make a video about the evils of ... oh, I don't know, strawberries? After all, there are people trading in strawberry futures! Never mind that commodity and derivatives markets allow farmers to manage the risk of not knowing with full certainty what they will be able to sell their crops for in the future. Never mind that as soon as we have, you know, like, physical stores, there's some middleman buying from someone and selling to someone else, and taking a bit of the money in the exchange for providing that convenience. All that matters is -- there are MARKETS involved, so strawberries must be eeeeeeeeevil.

Again, sigh. Leonard's problems with cap-and-trade are:

1. Free permits -- This is probably a bad idea at the end of the day, but it's not a problem with the incentive structure. It's "we'll give you money if you don't pollute" instead of "we'll charge you money when you want to pollute" but you still have more money when you don't pollute and less money when you do. I agree insofar as we might as well get government revenue out of this, but then -- let's auction off the permits. That doesn't have anything to do with the broader concept of "cap and trade".

Remember that in any kind of governmental structure that involves collecting constituent votes to pass legislation, you're going to have this tricky problem of actually getting those votes. If your program is really good for almost everybody, and bad for a few (say, hypothetically, West Virginia), it'd be good for society overall to do it, but those few people will be very loud voices of opposition. It might still be better for society overall for the many many people who stand to benefit to get together and *compensate* the few people who'd experience personal short-term harms. Giving away the permits essentially does that. Then you can get the votes of even those people.

I'm not saying that's the best possible system. Just that it's not a ludicrous one, especially when you consider political realities.

2. Offsetting -- It sounds from Leonard's explanation like the implementation of offsets is pretty stupid. Not the idea of offsets themselves. After all, if I pollute 10 units and simultaneously implement some program or otherwise do something that reverses 1 unit of pollution, I should really only be "charged" for 9 units. That concept isn't stupid at all.

Enforcement will never be perfect. Maybe this is an argument for caps slightly lower than we need them to be. It is still not an argument against cap-and-trade.

3. Distractions -- This point seems to be: we've gotten carried away debating some details of cap-and-trade but haven't focused enough on some other details. How is this an argument against cap-and-trade? Politics has some squabbling and some inefficiencies. So whatever plan we're currently squabbling over now is inherently terrible? The plan is not the reason for the squabbling. This is a wretchedly misguided argument.