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According to Robert Shapiro, former US Undersecretary of Commerce for Economic Affairs "Cap-and-trade combines a regulatory cap on greenhouse gas emissions with a market-based scheme to trade as financial instruments the “permits” to produce those emissions. For all of cap-and-trade’s initial promise as an answer to climate change, the current financial crisis has made its vulnerabilities painfully clear. The strategy would have the government create trillions of dollars in new, asset-based financial instruments. These emissions-right-backed securities, like their cousins, mortgage-backed securities, also would throw off a host of new derivatives to be profitably traded by the “professionals.” Unsurprisingly, cap-and-trade’s fiercest promoters include Wall Street institutions that see emissions-permit trading as a lucrative new market that could earn them billions in new fees, commissions and, while it lasts, speculative gains. But after Wall Street’s meltdown, the proposition for another round of the financial merry-go-round that produced the worst economic crisis in our lifetimes seems either very naïve or very cynical."
Shapiro goes on to mention a number of economic reasons why they should not be adopted. We are releived the ill conceived Australian CPRS scheme has been shelved and discuss more viable alternatives at our web page about replacing Kyoto
The Carbon Tax Centre regard carbon taxes as superior to carbon cap and trade systems for six fundamental reasons. They are
TecEco are particularly concerned with reason 4 and note the rapid recent growth of the lobby industry around the world. We agree with Phil Radford, executive director of Greenpeace USA when he said "Legislation needs to be based on the science, not based on which lobbyists paid the most".
What few others are writing about is that most cap and trade systems only allow offsets that are internally generated by the polluters in the system. That external offsets generated as a result of vital innovation appear to be excluded is of considerable concern.
 Shapiro, R. J. (2009). "Is Cap and Trade a Dead Policy Walking?" Retrieved 7 June 2009, 2009, from http://ndn.org/node/3761.
 CTC. (2009). "Tax vs Cap-Trade." Retrieved 6 Jun 2009, 2009.
 Walsh, B. (2009). "Greens Celebrate Cap-and-Trade Victory — Cautiously " Time 22 May 2009. Retrieved 06 Jun 09, 2009.