LAUDATO SI DOES THE POPE OPPOSE A CO2

CAP AND TRADE POLICY TO TACKLE CLIMATE

CHANGE?

Pope Francis recently released encyclical Laudato

Si is first and foremost a sweeping indictment of
an immoral non-response to climate change. It
condemns unchecked consumerism and a callous
non-response to moral and life-style change the
Pope feels are necessary.
Laudato Si drew quick responses, many praising
the tone and force of the Popes work. Buried in the
pages of the encyclicals broader moral concerns
were critiques of much more specific policy
positions combined with a broad critique of market
based responses. See among others: Championing
Environment, Francis Takes Aim at Global
Capitalism
http://www.nytimes.com/2015/06/19/world/europe/
pope-targets-carbon-credits-economists-favoredpath-to-change.html.
Current international policy debates on how to
manage and control greenhouse gas emissions play
a large, important part about how to tackle climate
change. The moral imperatives are important but
the policies need a closer look.
Specifically, the encyclical raises concerns about
the internalization of the cost of climate change
and the practice of buying and selling of carbon
credits. Wrapping around those specific issues the
encyclical issues a general admonition against
relying on the magic of market mechanisms,
specifically the belief that profit motives and price
mechanisms can by themselves address climate
change. Much of these criticisms are spot-on.

Higher prices from internalizing environmental

cost are not a magiacal market fix. Selling
greentags as environmental plenary indulgences
deserves a modern Martin Luther. Many of the
critiques also conclude that the general admonition
against market forces includes a condemnation
about cap and trade programs in general. This
needs a closer look.
Cap and trade programs if done legitimately are
concerned primarily with setting the cap. Trading
is an afterthought allowed primarily to make the
cost of compliance as low as possible thereby
increasing the likelihood for a successful program.
A cap on global warming gases would have to
evaluate the science of climate change, the state of
current and projected emissions, the state of
innovative technology to manage emissions, the
impacts of the policies on populations, and the
likelihood of success in bringing on the types of
innovations necessary to control, manage and
reduce emissions. A cap on greenhouse gases is not
a nave hope for market based solutions.
The encyclical first notes and rejects the
internationalization (sic) of environmental costs.
Here is the language of the encyclical:
170: Some strategies for lowering pollutant
gas emissions call for the
internationalization (sic) of environmental
costs, which would risk imposing on
countries with fewer resources burdensome
commitments to reducing emissions
comparable to those of the more
industrialized countries. Imposing such
measures penalizes those countries most in
need of development. A further injustice is
perpetrated under the guise of protecting
the environment. Here also, the poor end up

paying the price.

The encyclical of course meant to condemn the
internalization of environmental costs.
Internalization would add some estimate of the
economic damage done and add that cost to the
price of CO2 and other greenhouse gas emissions.
This price on carbon is an unfair, regressive tax
and Laudato Si is entirely right to oppose it.
The encyclical also opposes the buying and selling
of carbon credits. Here is the language:
171. The strategy of buying and selling carbon credits can lead to a new form of
speculation which would not help reduce
the emission of polluting gases worldwide.
This system seems to provide a quick and
easy solution under the guise of a certain
commitment to the environment, but in no
way does it allow for the radical change
which present circumstances require.
Rather, it may simply become a ploy which
permits maintaining the excessive
consumption of some countries and sectors.
Here the precise meaning is less clear because the
actual practices cover at least two very different
alternatives. For some time various green tags or
renewable energy credits have been bought and
sold. Think of a car with a bumper sticker
announcing; the emissions from this car have been
offset with credits from xxxxx. The same offsets
have been advertised for air travel. Im sure that
some of the international participants in the
upcoming round of climate change talks scheduled
for Paris will offset their emissions with similar
purchase of offsets.

These practices have allowed a kind of

environmental plenary indulgence. Churches have
railed against allowing the selling of indulgences in
the past to offset or remove the consequences of
individuals sins. Martin Luther led the reformation
in part to end the practice. While the church
concentrated on indulgences to offset the
consequences of religious sins, many have pointed
out that the commercial trade in green tags is a
kind of secular indulgence which should not be
allowed to offset the harm resulting from their
lifestyle by buying green tags or renewable energy
credits.
Many commenters from policy and academic
experts see this argument as opposition to a cap
and trade regime. A critical point here is that a
legitimate cap and trade programs greatest
emphasis is on the cap. The level of the cap on
greenhouse gas emissions will reflect a societal
commitment. For example US benchmark
emissions are 5.8 billion metric tons of CO2 or
equivalent gases. Decisions about capping those
emissions at a level or levels well below the 5.8
billion tons will be based on moral, scientific and
technological considerations. Trading exists to
encourage the development of new technologies
that will lower the cost of reducing emissions.
Trading is a secondary activity; the cap drives the
results. A cap and trade program that incorporated
the principals of the Clean Air Act Amendments of
1990 is completely consistent with the encyclicals
broad policy positions.
Covering both of these arguments is a general
argument made against market forces:

190. Here too, it should always be kept in

mind that environmental protection cannot

be assured solely on the basis of financial
calculations of costs and benefits. The
environment is one of those goods that
cannot be adequately safeguarded or
promoted by market forces. (Pontifical
Council for Justice and Peace, Compendium
of the Social Doctrine of the Church, 470.)
Once more, we need to reject a magical
conception of the market, which would
suggest that problems can be solved simply
by an increase in the profits of companies or
individuals.
Here is a takeaway: while many of the commenters
on the encyclical conclude that the Pope argues
against cap and trade policies to control global
warming gases, a close reading does not support
this conclusion. The encyclical argues against
policies like placing a tax on CO2 emissions and
cynical green tag trading schemes and generally
condemns purely market-based policies. The Pope
is right that there is no magic in market forces.
There is no clearer proof of this than the belief in
the efficacy assumed to accompany taxing carbon
emissions. Higher prices are not a policy. On the
other hand, a cap on greenhouse gas emissions if
done correctly will blend moral, scientific and
technological forces to allow society to manage,
control and reduce greenhouse gas emissions.