Cap-and-trade is dead, but some folks never tire of kicking the corpse. Corpse kickers received a boost last week from a paper published in the journal Proceedings of the National Academy of Sciences, which purported to show that cap-and-trade programs "do not provide sufficient incentives for energy technology innovation."
This strikes me as a classic example of a press release overhyping and oversimplifying a paper to get attention. Consequently, I bet a lot of people are going to misread it, and discussion of cap-and-trade, to the extent it still exists, will get even more caricatured and divorced from reality. Too bad -- the paper is actually pretty interesting. It's worth teasing out what it does and doesn't show.
Scientist Margaret Taylor of the Lawrence Berkeley National Laboratory analyzed two existing cap-and-trade programs: the national U.S. market for sulfur dioxide (SO2) and the nitrogen-oxides (NOx) trading program in Northeast and mid-Atlantic states. (Right off the bat, we need to be careful. The SO2 and NOx programs can be instructive, but a robust carbon trading system would be very, very different, incomparably larger and more complex.)
In particular, Taylor looked at the relationship between those two cap-and-trade programs and the rate of technological innovation. Here's the story she tells:


Julian Robertson is betting than Romney really cares about the climate.
Nathan Myhrvold. (Photo by Red Maxwell.)
Chief Judge David Sentelle.
Will the E.U.'s aviation emissions scheme get off the ground? Not if the U.S. has anything to say about it.