Having disposed of the Kyoto Protocol, the Bush administration is considering a "voluntary" program to curtail carbon-dioxide emissions. In some circles there is enthusiasm for creating a market to trade emission rights. Firms emitting fewer pollutants than they are allowed would be able to sell their emission rights to heavier polluters.

This would extend to CO₂ the current sulfur-dioxide emissions-trading program signed into law under the previous Bush administration.

But there are problems with this approach, say experts on regulatory economics.

• Any concession by the Bush administration that CO₂ levels should be reduced would undermine its argument that current science does not justify action on alleged global warming.

• If CO₂ levels are already too high, how can any program to make fossil fuels more affordable be justified?

• "Market mechanisms" such emission-rights trading aren't really markets -- simply schemes to use taxes and quotas to reach politically-determined objectives.

• While the costs of controlling SO2 emissions were high relative to the benefits achieved, the costs of a new CO₂ suppression policy are vastly greater -- and the benefits less certain.

A cap-and-trade scheme, say economists, would lead to a strong lobby opposing any liberalization of fuel usage caps because firms in a position to sell emission rights would not want to see the value of those rights diminished.

Source: Robert Crandall (Brookings Institution) and Fred L. Smith (Competitive Enterprise Institute), "CO₂ Controls Are a Bad Idea, 'Voluntary' or Not," Wall Street Journal, July 31, 2001.