Was at the gym this morning and caught this advocacy ad from "Repower America," Al Gore's climate change advocacy coalition. The framing caught my eye:"Close the carbon pollution loophole. The stuff from oil and coal that's destroying the planet? Cap it. And spur new investments in green jobs and clean energy." There are two interesting implications to that sentence. The first is that carbon is just like any other type of pollution. Polluters should have to pay. Nothing to see here. And there's a case for that attitude: Cap-and-trade was used successfully beat back the sulfur dioxide emissions that were causing acid rain. The policy worked more quickly than expected at a lower cost than predicted. The Economist called the program "probably the greatest green success story of the past decade." Here's a sort of ugly graph from the Environmental Defense Fund making the point:
As for "loophole," the word generally refers to a "weakness or exception that allows a system, such as a law or security, to be circumvented or otherwise avoided." You could make an argument that externalities -- costs that aren't paid by the participants in a transaction -- act as a loophole in market systems and high-carbon industries are taking advantage of it. You could also call it cost-shifting. In both cases, however, Repower America is trying to make the conversation around global warming more of a normal conversation around pollution and corporate misbehavior. Emissions are recast as pollution and an unpriced externality is explained as an unnoticed loophole that's enriching oil companies. Pollution and loopholes. We know how to handle that. It's an attempt to demystify cap-and-trade. Think it'll work?
As for "loophole," the word generally refers to a "weakness or exception that allows a system, such as a law or security, to be circumvented or otherwise avoided." You could make an argument that externalities -- costs that aren't paid by the participants in a transaction -- act as a loophole in market systems and high-carbon industries are taking advantage of it. You could also call it cost-shifting. In both cases, however, Repower America is trying to make the conversation around global warming more of a normal conversation around pollution and corporate misbehavior. Emissions are recast as pollution and an unpriced externality is explained as an unnoticed loophole that's enriching oil companies. Pollution and loopholes. We know how to handle that. It's an attempt to demystify cap-and-trade. Think it'll work? 
