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Free Range Studios and The Story of Stuff releases their latest video, The Story of Cap and Trade

Climate Change

The Story of Cap and Trade

Free Range Studios and The Story of Stuff releases their latest video, The Story of Cap and Trade

Why you can’t solve a problem with the thinking that created it

Many are probably aware of the viral video hit The Story of Stuff created by Annie Leonard. Today the Story of Stuff Project, in partnership with Climate Justice Now!, releases it’s next project, an animated 9-minute video called The Story of Cap and Trade.

Produced by Free Range Studios, The Story of Cap and Trade does what no congressional hearing or lobbyist talking head can do – make a greenhouse gas cap and trade scheme comprehensible. The short video by no means explains the entire scope of the cap and trade schemes proposed here in the US, or in place internationally, but what it does give a thorough grounding on the subject so that you and I can start to make sense of it. Once we do that, we can explore further, ask questions, begin a real dialog, and perhaps see why cap and trade schemes are not the best mechanism to deal with carbon emissions and climate change. Based on that, we can act and urge our leaders to make better choices.

With the world beginning to focus on the start of the COP15 climate conference next week, the timing couldn’t be better.

A false solution?

Last week I spoke with Daphne Wysham, a Fellow at the Institute for Policy Studies and co-director of IPS’ Sustainable Energy and Economy Network. Daphne was one of the principal consultants on the film and explained why she believes that cap and trade is a false solution to the challenge of stabilizing and then reducing carbon emissions. And it isn’t just her. In her research for the project, she heard from many legislators and policy wonks that may offer public support to the current cap and trade bills now before Congress, but privately harbor serious doubts as to the viability of a carbon trading scheme.

Why is this? Cap and trade isn’t new. It’s been considered by many as an unequivocal success in reducing acid rain in the United States. But many also fear that cap and trade for sulfur dioxide is one thing, and quite another for carbon.

The problem lay in the details, Wysham told me (and the film argues), and can be refined to three main problems:

  • Who sets the cap? – Defining the cap is something set in smokey back rooms by political wheeler-dealers. The point is that it’s primarily a political consideration. As the example of the high initial cap of the European Union’s first round of carbon trading demonstrated, an overallocation of free emissions “allowances” to polluters can force the price of the allowances to collapse and do little to motivate any real reduction of emissions. (To be fair, much of the problems of the first round of trading has been addressed in second round that began in 2008. Some have characterized the first round as the “trial phase.” For more on the EU Trading Scheme, see this paper done by the Pew Center on Global Climate Change (pdf))
  • Regulating carbon offset markets – is it really the best idea to hand over the buying and selling of carbon offsets to the same people that brought us the crash of ’08? There is continuing doubt about the effectiveness of carbon offsets, and turning them into a financial instrument traded in the derivatives market is likely to blow huge sums of cash into a bubble that will one day burst. We all know how that feels.
  • Free pollution permits – the wrong signal is sent by simply giving away pollution permits to the nation’s worst polluters. The Story of Cap and Trade suggests that all emissions credits should be sold or auctioned by the government, who can then use the revenue to fund clean energy development

Real progress

Wysham told me that cap and trade schemes really just play around the edges, giving an impression that something is being done about reducing carbon emissions, when it really isn’t. That’s one of the big problems outlined in The Story of Cap and Trade – that of distraction. With scientists saying the world needs to peak its carbon emissions within ten years, if not sooner, chasing down the dead-end road of cap and trade is a dangerous diversion to real progress.

What is needed is a tax shift that puts a definite price on carbon and shifts incentives toward clean energy development and efficiency. In particular the huge subsidies still given to fossil fuel development needs to shift to renewable energy expansion and distribution.

A new way of thinking is required. As we said at the outset, “you can’t solve a problem with the thinking that created it.”


So does that mean there is no hope for implementation of a workable solution to emissions reduction and climate change? Not necessarily, say Wysham. The current debate in Congress, such as it is, “reveals the process” of cap and trade and means that finally the country is having a conversation about how to address the challenge. And that’s where The Story of Cap and Trade serves it’s purpose.

I spoke with Free Range Studios founder Jonah Sachs over the weekend. For Sachs, the way we all understand our lives and the issues before us is through narrative. OUr lives and our world is told and understood through stories. By delivering a clear, repeatable message, people will begin to comprehend the issue at hand and thus drive social change. It’s a bottom-up approach that can spread a message through people’s conversation and help create real dialog. “The only potential for change,” says Sachs, “is through media that is democratized. People speaking to each other, one on one.”

So here, at last, it is: The Story of Cap and Trade. You may not entirely agree with it, it might make you ask some questions. It hopefully will help you better understand what is at stake and talk about it with friends and colleagues, and they with theirs.

That’s the whole point.

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Written By

is an online publisher, editor, and freelance writer. He is the founder of and the History Blog Project, as well as publisher and site director for the Tom also contributes to numerous environmental blogs, including TriplePundit, Ecopolitology, Sustainablog, and Planetsave.   Tom's work has led him to Europe, Africa, Latin America, Canada, the South Pacific, and across the United States. His home base is San Francisco, California.


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