Cap and trade is a proposal some in Washington have advocated for in order to address global warming. It would be a system where the government would set a price for carbon permits to be traded on an exchange.

Companies that emit more than a certain limit of carbon would be required to purchase them. Revenue yielded from the permits then would be spent by Congress on alternative energy.

At first thought, it seems reasonable for our government to fund alternative energy. Most Americans believe finding an alternative to importing Saudi oil is not good just for American jobs, but our moral standing in the world as well. However, supporters of this approach fail to see its many pitfalls.

First, these carbon permits essentially would be an extra tax levied against businesses. As a consequence, companies would have to either pass these costs on to the consumer or lay off workers in order to break even.

A recent Massachusetts Institute of Technology report suggested the American Clean Energy and Security Act of 2009, or Waxman-Markey bill, introduced in the U.S. House of Representatives would cost the average family thousands in yearly expenses, the poor being the hardest hit by increased energy and food prices.

The last thing we need during a “Great Recession” is more unemployment, inflation and business uncertainty.

Another major problem is how the revenue collected from these carbon permits would be spent. Washington is notorious, under either party’s rule, for bowing to the whims of special interests.

Accordingly, cap and trade legislation would become a field day for trial lawyers. Companies with influential lobbyists on Capitol Hill would end up receiving tax breaks. Past federal and state “green” policies reflect that narrative.

Finally, even if we conserve 10 percent of carbon emissions by this taxation, the flood of people driving new cars and opening coal mines in India and China will cancel out these reductions.

That is the problem with simply taxing things we do not like — it does not fundamentally change our energy needs from fossil fuels to cleaner energy sources. It is just a redistribution of wealth from industry to Washington.

Therefore, I argue a serious plan to achieve energy independence and environmental stewardship must rely on market incentives, not penalties. Still, it must be done prudently.

Congress should be simple for once and mandate the fuel efficiency new green technologies must meet to receive special tax treatment. The legislation would read something like, “Companies that invent cars getting 250 miles per gallon, or mpg, will receive a four-year payroll tax cut.”

The result would be our brightest engineers, scientists and business people all competing for the next green innovation. The truth is that government cannot pick companies or industries as winners and losers accurately or fairly. But government can provide the right environment and incentives for green innovation to take place.

We can pay for this by cleaning up the mess that already exists: Eliminate the cherry-picked “green subsidies” that are in the tax code by virtue of clever lawyers. Use that saved revenue to fund tax relief for the companies that can deliver tangible, measurable results.

A car that gets 250 mpg is something we can see and that goes vroom. Even Congress can figure that out. Additionally, the newly discovered green fuels and technologies to emerge from this nationwide competition would be produced in the U.S.

We would create millions of jobs in manufacturing, engineering and business. And for the first time in our lifetimes, consumers would not be held hostage by the Organization of Petroleum Exporting Countries, or OPEC’s, monopoly on oil prices.

America has led the world in every major economic advance in history. There is no reason we cannot revolutionize how the world uses energy.

Ameek Singh is a State News guest columnist and an international relations junior. Reach him at sodhiame@msu.edu.