A father-and-son op-ed in the Wall Street Journal notes that California’s cap-and-trade energy scheme (like Rhode Island’s) misses the reality that companies can simply leave and, moreover, have incentive to do so:
Yet the law’s designers still have not confronted the central conundrum of trying to impose a state or regional climate policy: As firms compete for a limited supply of carbon permits, they are put at a disadvantage to out-of-state rivals. Production flees the state, taking jobs and tax revenues with it. Emissions “leak” outside California’s cap to other jurisdictions.
Of course, as we can readily observe in Rhode Island, this works out just fine for people who have jobs (often because they’re politically connected) and the wealth to tolerate higher energy prices. They’re happy to pay more for energy… for everything… if they get to feel good about “being green” and never coming across any energy-production plants that don’t give them a thrill of self virtue, like wind turbines might. Those to whom that doesn’t apply, however, find that they have incentive to leave the state, as well.