REVIEW: Annie Leonard’s “The Story of Cap and Trade”

Just over two years after the release of Annie Leonard’s popular, educational online film entitled “The Story of Stuff,” she is at it again.  Leonard’s new timely presentation on “The Story of Cap and Trade” provides a clear explanation of how cap and trade works and who benefits from it.  However this overly-simplified version of the facts has also generated its fair share of criticism within the environmental world.

She begins with a refreshing demonstration of enthusiasm for the upcoming conference in Copenhagen, expressing that the fact that world leaders are getting together to talk about climate solutions is a huge triumph and potentially an important step in right direction.  But she harshly warns that cap and trade should not be the only solution considered.  Cap and trade has been strongly promoted by many well-intention people, but its designers comprise a surprising amount of Enron and Goldman Sachs representatives who have essentially created a carbon stock market.  While this may sound disconcerting, it can also be argued that because cap and trade is supported by those who actually have wealth and power, it stands a better chance of being pushed through.

Ideally, this market will be capped such that each country gets a certain number of pollution permits.  Each year such permits will become fewer and so more expensive.  Those who do not need them will sell to those who do and therefore total emissions will remain under the cap.  According to Leonard, “the devil is in the details.”

Detail number one is that initial permits will be free in what is more accurately a “cap and giveaway” system.  The more an individual company has historically polluted, the more permits they will receive.  Europe has tried this, and according to Leonard it resulted in unstable permit prices, higher gas prices, increased emissions, and the polluters made money.

Rather than creating a system in which polluters profit, Leonard advocates that funds instead be used to promote a clean energy economy, provide dividends for citizens to afford energy while transitioning to new fuel sources, and to compensate for ecological debt, which mainly occurs as first world countries benefit at the expense of environmental degradation in the third world.  While these solutions certainly sound good, they are a bit too vague to provide a clear view of realistic alternatives to investing in cap and trade.

The second “devilish” detail is in the concept of offsetting.  It is very difficult to guarantee that offsets are truly serving their vital function.  For example, Indonesian indigenous forests have been cut down and replaced with palm oil trees, and somehow this destruction has been valued as a false offset.  Additionally, some companies can receive credit for offsetting simply by not expanding as much as they claimed they had planned to.  Expanding less certainly does not actually offset any carbon emissions.

Thirdly, Leonard portrays cap and trade as a dangerous distraction.  She argues that people are eager to accept whatever is proposed and so are neglecting alternative solutions that exist.  Leonard claims that it weakens our ability to effectively utilize strong laws like the Clean Air Act, which already lists carbon dioxide a pollutant that can be regulated by the EPA.  Cap and trade does more to protect business as usual than it does to demand solid caps, strong laws, citizen action, or carbon fees – all of which offer truer solutions to climate change.  Basically, its creators want to sacrifice nothing, get rich, and save the planet if possible.  Leonard admits that cap and trade may serve as an important first step and it is certainly better than nothing, but she insists that we cannot solve the climate change problem with the same mindset that got us into this mess.  She has indeed raised some valid concerns about cap and trade; however, Leonard fails to provide adequate arguments in favor of other solutions.  She does not explain with any degree of detail how a carbon tax would work.  Carbon taxing, like cap and trade, has several benefits but also its own set of faults and imperfections.

Leonard’s original video “The Story of Stuff” was wonderfully simple and managed to explain the illogicalities and inefficiencies of our society in a way that anyone can understand.  Contrastingly, “The Story of Cap and Trade” is simple to a default and paints climate change solutions as black or white, despite their clearly complex nature.

To watch the video and see for yourself how you feel about this controversial argument, visit “The Story of Cap and Trade” website.

To watch Annie Leonard’s original short film on the dangers of our consumer-based society and to learn about her other initiatives, visit “The Story of Stuff” website.

A Dispatch by Lila Holzman