I need a hummer

June 21, 2005 at 11:34 pm (Environment)

Now you can turn that gas guzzler into an earth friendly green machine, and absolve yourself of your personal responsibility for decades of turmoil in the Middle East, Africa, and Venezuela. Yes, TerraPass is here.

The idea is the latest implementation in the trading of “pollution credits.” Those are the market-based innovations, introduced a few years ago, which allow smoke-spewing companies to buy and sell the right to emit certain amounts of pollutants into the air.

If you buy a TerraPass, the money will be used to purchase smog allowances on the Chicago Climate Exchange. The Climate Exchange allows polluting companies that produce less than a certain amount of airborne pollutants to sell credits to other companies that then allow them to go over the limit.

The overall limits are reduced over time making it more costly to exceed them. Organizations and companies that buy pollution credits reduce the overall supply of credits and also make it more costly for companies to exceed the limits.

I think this is a really, really good idea. Pollution credit trading can work in a lot of cases, but since industries often have regulators in their pockets the caps set are often too high. I have wondered why groups like the Sierra Club don’t buy up credits and just sit on them. They have no economic incentive, and the marginal impact of buying up a few hundred tons of sulfur dioxide credits would be minimal. But this way, we can spread out the pain and before you know it pollution credits could be a very valuable commodity. The Society for MOre Koal Energy is not going to like it, though. I might wait 6 months or so, see if this company is legit, and buy up some myself.