Here’s the key about the whole debate about cap and trade (and health care): it’s all about redistributing wealth without using an explicit tax. Obama and liberal dems would be viewed in a better light if they were honest with the american people if they proposed an open tax for either policy (CO2 reductions and health care). Of course, it likely won’t pass, but at least the would be intellectually honest about what they are doing.

The CRU is under scrutiny:
http://blogs.telegraph.co.uk/news/jamesdelingpole/100023449/wow-uk-parliamentary-investigation-into-climategate-may-not-be-a-whitewash/

There are efficient ways to approach the debunking of this fraud. The best ones I’ve seen are here:
http://www.samizdata.net/blog/archives/2010/01/cold_wars_1.html

We have watched through a keyhole as two “sausages” were made by bootlegger-influenced baptists. Each of these sausages bears some fleeting resemblance to both cap & trade and a carbon tax, combined with an unhealthy dose of “winner picking” and income redistribution.

We have watched the globe cool, though the “settled science” remained “settled”, while many of the scientists became quite unsettled as the result of the release of details regarding their activities.

We have seen the global community expose its various, disparate elements (achievers, aspirants and beggars) for all to see during a massive snowstorm in Copenhagen.

Finally, as I have pointed out here previously, we have seen the “Three Legged Stool” of anthropogenic global climate change exposed for those capable of seeing it without any assistance from the bootleggers, the baptists or the media.

Leg 1: Zero carbon emissions (“350″, Gavin Schmidt)
Leg 2: Zero animal husbandry (Ban Ki Moon)
Leg 3: Population Controls (John Holdren, Cass Sunstein)
Seat: World Government (EU President, early Copenhagen draft)

The stool above would arguably have been the most expensive piece of truly ugly furniture in the history of the world, had it been assembled.

The old-source/new-source distinction is unwise because it gravely distorts the market and creates rampant inefficiency. A unit of air emissions from an old coal-fired power plant has the same environmental and human health impact as a unit of air emissions from a new coal-fired power plant. What possible justification is there to treat those emissions differrently from a regulatory perspective? Doing so leads to deep problems.

First, it imposes competitive disadvantages on new entrants which in turn leads to the the cartelization of the wholesale power business. The new-source/old-source standards are in effect a massive wealth transfer to coal-fired power plants built before 1970 and the wealth in question comes ultimately from ratepayers, who pay higher prices as a consequence of artificially restricting competition and encouraging producer inefficiency (see below).

Second, it encourages overall inefficiency in power production given the artificial advantages conferred to old plants relative to new, more efficient plants. How many industries outside of the power industry find that the most profitable facilities are those with 40+ year-old technology? Obviously, profit incentives like this distort investment flows in myriad, unproductive ways.

Third, upgrading those plants threatens to turn “old sources” into “new sources” for regulatory purposes. This discourages otherwise economically sensible investments that would surely be made.

Fourth, the never-ending legal fight about when an upgrade to an old, grandfathered coal-fired plant makes it for all intents and purposes a “new” source for regualtory purposes has eaten up hundreds of millions of dollars that have gone to lobbyists and lawyers. That money (termed “dead-weight losses” by economists) could be more profitably spent on wealth creating investments elsewhere.

If we find ourselves in a regulatory world in which tough standards are only imposed on those who can comfortably pay them but lighter standards are imposed on those who can’t, we’ll discover – as economists already have – that we’re artificially subsidizing inefficient economic actors to the detriment of the economy as a whole.

Why is it libertarian to support such a policy? If pollution is imposing significant costs on third parties, the proper libertarian position – it seems to me – is to at the very least force the polluter to compensate the injured third parties for the losses they are being forced to incur. Establishing rules that let less economically healthy companies off the hook from said compensation does not strike me as a very principled (libertarian) thing to do.