Analysis Of Carbon Taxes Versus Cap And Trade

For the last two decades, the increased use of fossil energy caused the environmental problems. The evidence of global warming, like drying rivers, extinction of species, melting of glaciers, became more often around the planet. The climate change became a threat to healthy environment and prosperity of humanity and wildlife, and the world community started searching for solution to combat climate change. In 2008 British Columbia introduced carbon tax on greenhouse gas (GHG) emissions to reduce global warming. Starting from $10 per tonne of CO2, the price was increasing annually till it reached $30 per tonne in 2012. During that period British Columbia was reducing harmful emissions and improving economy comparing to the rest of Canada. However, since the price rise on carbon stopped in 2012, no improving changes in cutting emissions, economy, and overall quality of life have been noticed. In this essay I will persuade that British Columbia should continue gradually increase price on carbon tax to the level where it will significantly cut the use of dirty energy, provide enough investments into the green projects, and support low-income families.

Replace Cap & Trade Carbon Tax with environmentally responsible initiatives which reinvest revenue in Northern Ontario, a Carbon Tax placed on imports from excessive carbon producing countries of 10%.

In the beginning, the writers present the process of the research conducted by the MIT researchers and conclusions that showed how even a low carbon tax would be effective at lowering carbon emissions. The writers continue the article by pointing out the effects of different policies, relating to the revenue created from a carbon tax, on corporations and lower income households. Finally, the writers draw attention to the fact that this carbon tax will greatly influence the effects of global warming. This article was written for Americans and is a solution that is perfect for the political spectrum of any government institution within the United States. The article addresses ways that a carbon tax can be used to please both liberals and conservatives. Though the writers did not conduct their own research, they did cite a study conducted by university researchers and a government organization and use interviews with key researchers in the study. Though this article cites only one research study, the idea of a carbon tax is still a viable solution and it will be used in my research to show that there is a viable solution to the problem of air

One way of obtaining individual caps is for the government to auction off emission permits that total the pre-set amount of emissions that it feels is optimal. Firms with higher costs of reducing emissions will bid higher than firms with lower cost structures. Again, the only problem is determining what the total amount of emissions should be reflecting all social costs and benefits of reducing carbon emissions.

Carbon taxing coal-based products, in a revenue-neutral way, will help discourage overuse of fossil fuels. The United States needs to reduce carbon emissions in order to avoid the costs that pollution and climate change inflict on the general economy and individuals. Carbon, unlike other commodities exchanged and consumed in the free market, bears unique costs to the general economy that its market price does not encompass. The pollution we create when we consume carbon contaminates our air, raises temperatures, and makes severe weather events more frequent. A carbon tax is an economic mechanism that forces actors in a free market to come face-to-face with the social cost of

A cap-and-trade program sets a maximum level of pollution, and distributes emission permits among firms that produce emissions (Carbon Tax, 2013). The purpose of which is regulation of specific emissions by stationary and mobile sources, and setting a specific level which all emitters are re-quired to meet. Cap-and-trade possibly has less of a direct economic component to it than the other alternatives to reducing emissions described due to the ability to trade permits versus the expendi-ture of resources improving technology, with some arguing it is to the detriment of the environment. As stated in the article found in Reclaiming the Environmental Agenda, by Ashford, N. et al., 2008, “being a market-based instrument, ‘the cap-and-trade option suggests that at least this form of MBI may be more environmentally effective than the usual command-and-control alternatives, in addition to being more economically efficient.” (Ashford, N. and Caldart, C., 2008, p. 908).

The cap on the market is set on carbon emissions, creating scarcity within the market. At the end of each year businesses within the scheme are required to ensure they have enough allowances to account for their installation’s actual emissions. Those firms that do not comply and pollute without sufficient permits are hit with heavy fines. (Euro 100 per ton). The aim of carbon trading is to create a market in pollution permits and put a price on carbon. In this way, policy can help internalise external costs of firms’ production and encourage lower emissions to tackle climate change. In a cap and trade system, the volume permits would gradually decline and total emissions, in theory, will diminish. The model of such can be shown as

There are many advantages and disadvantages when it comes to any system in regards to reducing the greenhouse gas emissions. If there is a legislation that seems like environmentally would be best, most likely it comes with a cost that sometimes may seem unsustainable. Just the same, there are advantages and disadvantages to the cap-and-trade system. As Steve Richey writes in his ‘Pros and Cons of Cap and Trade’ article. The major draw toward this program is its efficiency. Companies are able to reduce their emissions at a low cost, and sell emissions credits to companies who cannot. A certain number of credits are made available to purchase. This allows the option for environmentalist to purchase the credits and retire them, therefore decreasing the harmful effects of climate change. The disadvantages to the cap-and-trade system are that larger companies drawn to use coal, oil and gas have less of an incentive to switch to using

Cap and trade is a system aimed at diminishing the rate at which carbon is emitted into the atmosphere by creating an economic system based on meeting a certain minimal threshold or paying low-emitting companies for the right to emit in their place. For example, if company A only emits half of the emissions cap, that company can sell (or trade) the remaining credits to company B, should company B choose to emit one-and-a-half times the cap. A main objection to the cap and trade system is that it is not a strong enough means by which to curb emissions of fossil fuels and is inferior to specifically stronger carbon taxes. While initially appealing, the notion of simply strengthening carbon taxes fails to properly stifle carbon emissions and to adequately incentivize “green” development in comparison to the cap and trade system, preventing carbon taxes from occupying a central role to mitigate carbon emissions.

Cap & Trade vs. Carbon Taxes – Which system can impact CO2 emissions the most?

Climate change has been an increasing concern in today’s world and has proven to be detrimental in the coming years. With the increasing human population, the consumption of fossil fuels has been in high demand and this poses a threat in the future. After several years of political and cultural pressure to take a stand on climate change and in order to control the regulation of carbon dioxide emissions into the atmosphere, British Columbia implemented the carbon tax on July 1, 2008 (Murray and Rivers, page 3). This tax was the first to be imposed in North America and was revenue-neutral (Murray and Rivers, page 3). Due to its myriad of benefits, the carbon tax was favored by many and did has not disappointed; not only have greenhouse gas emissions dropped, but business have grown tremendously, and other energy sectors are flourishing. While counter arguments may highlight the negative effects of the taxation policy, rebuttals often overlook the long-term advantages. In this paper, I will prove that the carbon tax policy in British Columbia has had several beneficial outcomes such as the reduction of greenhouse gases and economic growth. I will then raise an opposition to my thesis by arguing that the short-term economic effects will be damaging to the lower-income classes. However, I will show that this objection is not as valid because the long-term benefits, both economically and environmentally will ultimately prove integral in the alleviating future climate change.

Government enacted solutions are probably the most effective ways to reduce carbon emissions and to control pollution since unfortunately the majority of individuals mainly act to their own self-interest and are not concerned with the future of the planet. This is a prime example of the tragedy of the commons, which is the exploitation of a common resource. In this case the common resource is the atmosphere. The first method proposed is the carbon cap trade system. The term cap means the limit or the maximum of the amount of pollutant to be emitted. A trade refers to the transfer of permits that have to be bought by firms that need to increase their volume of emissions from firms that require fewer permits 1. The carbon tax method is a tax on the carbon content of fuels — effectively a tax on the carbon dioxide emissions from burning fossil fuels 2. So, which system would be best for the government to enact to reduce carbon emissions in the atmosphere?

Cap and trade is a regulated program to offset any negative damage to the environment by private business activity. This market system has the potential to make efficient product cost, and is a sure way to guarantee lower emissions. Emitters are limited a set amount of pollution to be distributed and operating without a permit is illegal.

In February 2011, the Australian federal government declared a scheme to implement a Carbon Tax from July 1, 2012. Implementing this scheme has generated a controversial debate between Australians. The term “Carbon tax” refers to an environmental tax forcing polluters to pay per ton of carbon which they release into the atmosphere. This essay will provide the economical, social and political implication of carbon taxes, also with its introduction who will benefit and who would suffer.

Pollution, specifically global warming, is of growing concern to people and governments. It is a controversial issue whose validity is still being debated by scientists. The Kyoto Protocol is an international attempt to address global warming through emissions controls. Traditional neoclassical economic models do not incorporate pollution in rudimentary theories of supply, demand, or pricing, as a result, firms do not consider pollution as a cost of production, which leaves government regulation as the primary method for controlling these externalities. The goal of emissions trading is to allow one business, which can make greenhouse gas emission reductions for a relatively low cost, to sell