Talk:Pollution credit

I don't get it. I thought pollution credits were a technique for assigning a cost to externalities of economic activity.

For instance, Bob buys a watt of power from Alice. Alice has to run a coal-fired power plant, which emits various forms of pollution. The social and environmental cost of that pollution is not reflected in any of the costs of doing business that Alice faces. The goal of pollution credits, so far as I understood them, was that in order to have the right to emit, say, carbon monoxide, Alice would have to purchase that right from the government or another company that has cut their carbon monoxide output. The pollution credits are issued by the government, and are essentially subject to free market pricing. Thus pollution becomes a cost to be minimized. If government wishes to reduce pollution, it buys back pollution credits from industry, thus raising the cost of it, and providing Alice an incentive to find alternate ways to make her watts.

I have absolutely no idea what pollution credit this author is talking about, but the article does seem quite slanted against them. -- SteveVanEgmond