George Will had a fabulous article on cap and trade over the weekend in the Washington Post.  It’s worth reading in its entirety here.  Will does a good job in laying out the government’s profit motive under a cap and trade system: 

Speaking of endless troubles, “cap-and-trade” comes cloaked in reassuring rhetoric about the government merely creating a market, but government actually would create a scarcity so that government could sell what it had made scarce. The Wall Street Journal underestimates cap-and-trade’s perniciousness when it says the scheme would create a new right (“allowances”) to produce carbon dioxide and would put a price on the right. Actually, because freedom is the silence of the law, that right has always existed in the absence of prohibitions. With cap-and-trade, government would create a right for itself— an extraordinarily lucrative right to ration Americans’ exercise of their traditional rights.  

Businesses with unused emission allowances could sell their surpluses to businesses that exceed their allowances. The more expensive and constraining the allowances, the more money government would gain.

Another aspect of cap and trade that’s easy to forget about is foreign companies.  As Will points out, the cap and trade structure is extremely protectionist in this regard: 

Lieberman’s legislation also would create a Carbon Market Efficiency Board empowered to “provide allowances and alter demands” in response to “an impact that is much more onerous” than expected. And Lieberman says that if a foreign company selling a product in America “enjoys a price advantage over an American competitor” because the American firm has had to comply with the cap-and-trade regime, “we will impose a fee” on the foreign company “to equalize the price.” Protectionism-masquerading-as

-environmentalism will thicken the unsavory entanglement of commercial life and political life.