I attended a roundtable discussion on Carbon Trading: Solution to Climate Change or Corporate Resource Grab last night hosted by an indigenous environmental justice (?) group (Community Alliance & Peacemaking Project) and featuring Larry Lohmann of the Corner House as main speaker. It's really important that the climate movement connect to indigenous communities and movements, and it was great to be in a discussion with numerous members of these groups.

Unfortunately, the main thrust of this evening was that carbon pricing is bad, just another corporate scam, and should be opposed. It was disturbing to see the room line up in support of this misguided idea. It is not only wrong, but adopting such an ill-considered stance will utterly marginalize the climate justice movement.

Lohmann is on a book tour to spread this idea that carbon trading is bad. His argument in a nutshell is this: We need structural change, a radical transformation of our energy supply infrastructure. But price mechanisms can't achieve that, because all they do is make change cheaper for corporations. In particular, cap-and-trade is designed to actually delay change, because it lets the worst offenders buy credits rather than change.

There's a lot else in his talk, focused on bad things that corporate powers have done to local communities in the name of carbon reduction. I have no argument with that. Obviously, poorly implemented, corrupt policy is bad.

But his core argument is terribly wrong.

If you want structural change, put a stiff price on carbon. That's simply an application of the polluter pays principle. We could do emissions reductions via command-and-control, but it's smarter to use market-based mechanisms such as cap-and-trade or a carbon tax, because they will tend to make it less expensive for us to de-carbonize.

Larry makes it sound like these market mechanisms are just designed to save the evil corporations money. But the corporations are going to pass most of their costs on to consumers, so it matters a lot whether we do it in a cost-effective or not. Rising energy costs are going to hit poor people hard, and nothing in Lohmann's talk makes it clear that he has any understanding of this.

Rather than focusing on the utter red herring of tradeable permits, the climate justice community should be focused on revenue recycling. That is, we should be making sure that carbon permits are auctioned, not given away for free, and that the resulting revenues are used (in part) to reduce the regressive impacts of rising energy costs.

When I raised this point, Larry's response was to reiterate his idea that pricing mechanisms won't lead to "structural change." This is utterly wrong. If carbon is priced high enough (in other words, if the cap is tight enough), then it will lead to structural change. In reality, we need to find the price point that is stiff enough to stimulate big change without causing unneeded economic disruption. Because we all know who gets hurt when the economy gets in trouble.