David Nahai's argument is that the DWP will invest a lot of ratepayer money to replace its out-of-state coal purchases with renewable electricity as those contracts expire, and a carbon fee would be a double expense during the ramp-up period.

Plans especially include base-load geothermal in the Imperial Valley (which requires controversial new transmission lines), as well as desert solar thermal and in-basin rooftop PV. They do appear to be moving about as rapidly as they can on these.

Assuming that we all share the same goal of reduction of CO2 emissions, capping those emissions directly reduces them.  I agree that there should also be a carbon tax, but I hate the trade aspect because it's just a loophole for not complying with cap limits.  So:

Why do we need the trade portion?  Why would strict caps not provide the desired results?

How could a carbon fee possibly get better results than a direct cap, the latter of which gets the results directly?

Why can't we have a carbon tax and a cap (and trade, if necessary)?  Are they mutually exclusive for some reason?

In reply to Wolverine:

Yes, emissions traders introduce many problems and would require a huge monitoring and enforcement effort.  Manipulations on the scale of Enron have been predicted and speculation on permit prices is already underway. In his new book "Question of Balance" Yale economist William Nordhaus predicts tradeable permits would become the new underground currency for terrorism, guns and drugs.  (And what would be the sanction for rogue players?  Cut them out of the emissions reduction regime?)  

"Cap" without "trade" would be a regulation. E.g., "Every facility (individual?) must reduce CO2 emissions X percent a year."  Some can do it cheaper than others and some can do it sooner than others. Hence trading was introduced to allow optimization.  

But to work, cap and trade requires that emissions be permitted and that permits be tradeable.  Permits should all be auctioned.  (Why would we give past polluters a free, vested right to keep polluting?)  As the Republicans helpfully pointed out during the debate over the Lieberman cap-and-trade bill, auctioning permits and requiring all emitters to have a permit for every ton of CO2 is a tax.  In fact, the biggest tax ever.

The Lieberman bill would have reaped from energy consumers (hitting the poor hard) $4.3 trillion (yes, that's a "t") and doled it out to past polluters and to big, dirty energy corporations, with handouts to favored "renewables" like: corn-based ethanol, nukes and so-called "clean coal" research.   (See Friends of the Earth's "giveaway analysis" of Lieberman's bill.)  Not much to real renewables like wind and solar.  

So economists of all stripes (and a few enviros are coming around) prefer a staight tax on fossil fuels in proportion to their carbon content.  (Coal highest, petroleum in the middle and natural gas the lowest.)  No traders.  No permits.  No price spikes.  Easy to internationalize.  No bickering over the cap: who's covered, and who gets exemptions, etc.

If the tax revenue is used to offset other taxes, it's called a "tax shift."  (Canada is debating a "Green Shift" along these lines.)  Offsetting regressive taxes (e.g., payroll taxes) could make the carbon tax  progressive.  Or a direct, equal (monthly?) "dividend" (share of the carbon tax revenue) to individuals would offset the income effect, pumping all the carbon tax revenue back into the economy -- hitting the bigger fossil fuel users the hardest but more than offsetting the price increases felt by those using less than average.  A revenue-neutral carbon tax would create ongoing incentives for everyone to conserve and switch to alternatives.  

That's exactly the opposite of what cheap fossil fuel energy tells us to do now: encouraging us to use as much as we can.  Efficiency advances have been overtaken by new uses for cheap fuel.  

Can't think of a reason that a cap and a tax couldn't be done together, but a cap (with necessary monitoring and enforcement) just isn't needed if the tax is high enough and goes up predictably to affect behavior and planning.  

A hybrid approach is a cap with a price ceiling or "offramp."  When the price of permits hits the ceiling, a "safety valve" is opened.  That's helpful to limit price spikes, (but of course removes the emissions certainty of a fixed cap) and we'd still have the complexities of implementation (the EU's cap-and-trade system is a nightmare and has acheived no net reductions) as well as traders, the opportunities for gaming the system, and the regressivity of a hidden carbon tax.      

About the only advantage of cap-and-trade is that it's not called a "tax" (even though it is a huge, regressive tax).  Aside from frightful name, a revenue-neutral carbon tax is truly an elegant and transparent system.  

Check out The Carbon Tax Center for more information.  www.carbontax.org.  

All of these schemes that provide you personal income are based upon tiered rate schedules that play upon class envy and spite. Charge me .36 a kwh so others pay a fraction of the rate. They will gladly vote to screw me. After all, I earn more than they do. Made the mistake of working hard and smart.

The poor don't pay taxes in this country. They consume services.

This is social engineering at it's worst. Especially when you consider that a whole new breed of leeches has sprung from this swamp.

You don't like so-called "regressive" taxes? Set a floor and charge a flat rate above that floor.

The argument about payroll taxes being regressive is a hollow defense of wealth redistribution. BENEFITS ARE CAPPED. No matter how much I pay, I will never be entitled to any more than those who pay far, far less.

California doesn't need anymore $167,000 a year bureaucrats who don't pay ANY SS taxes.

"...a 90 percent chance that the US has contributed .2 degrees F of temperature increase in the last 50 years..." The IPCC Consensus in perspective

I know that LADWP can get the job done. They are just maneuvering now.

In the early 90s, there were severe penalties for using more water (a drought, sound familiar?) and LADWP cut its [customers'] use by enough to get millions of "conservation" rebates.

I favor a tax over C&T (for reasons discussed above), but be SURE to know that LADWP will reduce emissions if there's money at stake.

Will allowances be auctioned and will revenue be used for efficiency or to mainstream clean tech?

LADWP is not an environmental ally.  See a movie called Chinatown to get an idea of the ecological and environmental harms that this agency will do in order to serve developers and other such interests.