Cap and Trade - is market purity

The really scary thing is that the *blue* team should be falling all over themselves to support a Cap and Trade carbon trading system.

Why? Because of all the alternatives, this is the ultimate free market system - the one that is driven by their private enterprise based ideology and so-called market purity.

The principle is simple:

The cap is set in advance and the government will issue "permits to pollute" to a certain level of emmissions on behalf of the nation. This cap is designed to reduce over time - improving the emission performance of the nation.

As we have already seen there is an enormous amount of lobbying around the detail but eventually Penny and Kevin will get the mix and balance right - and issue the permits. Note to Penny - "Sooner is better".

Those who can't (or won't) change their carbon polluting habits will need to acquire new permits to pollute over time from those who have them - and pay the market price.

The market price is determined by the natural laws of "supply and demand" - so greater demand will naturally mean a higher price. This should be music to the *blues* ears - at least the rational ones.

And this "permit price" will need to be factored in to the cost of the "goods and services" on offer. So over time, the intent is that "carbon polluting products and services" will be more expensive than those that don't produce excessive carbon and therefore don't need to acquire permits.

According to the *blues* ideology - this is precisely how you would design and implement such a system.

But Kevin and Penny can't take all the credit - this is how the existing systems work and how an international system would work.