Climatology is an inexact science to say the least. The only undisputed facts are: there are gases that are transparent to ultraviolet light but absorb infrared radiation, creating the ‘greenhouse effect’, and human activity has caused the accumulation of greenhouse gasses to increase across the world (McKibben & Wilcoxen, 2002). The application of microeconomic principles can be used to address some of the fallout of the climate change caused by the greenhouse effect. In this paper we will take a look at three such measures and what their application can mean to the industry. The same way that there are various uncertain factors when accounting for climate change (clouds, ocean temperature, aerosols’ effect, etc.), there are various microeconomic principles that can be applied to help reduce emissions, with equally diverse results. One of the most limiting forms of creating clean emissions standards is a renewable portfolio standard (RPS) limited to renewable technology (Paul, Palmer & Woerman, 2011). This is restrictive because of an unfair distribution of credits dependent upon which technology the RPS is being applied to. For example, an RPS that treats all renewables equally would highly encourage the low-cost renewables like bio-mass and wind, while high-cost renewables like solar would not be promoted as fairly (Paul, Palmer & Woerman). Some states help address this disproportion allotment with ‘carve-outs’ or portions of the RPS that addresses separate renewables
The world economy is a very complex system; in the system harmful externalities disrupt capital flows and determine economic productivity. Most notable of these externalities is inadvertent global warming. Spending towards research and regulation of climate change at both the national and international level are very important in determining current and future business trends. Economists and scientists worldwide continuously debate the pros and cons of emissions reduction and what consequences can quickly follow. Though many have different views on the issue, all can agree that the immediate and long term effects of climate change have become an economic matter of paramount importance. The sweeping impact from climate change will have important fiscal, financial, and macroeconomic ramifications that influence global commerce standards.
The argument about man’s role in climate change and the role of government, the role of industry and the role of citizens is a significant challenge that crosses all levels of government, crosses all geopolitical boundaries and crosses all sectors of business. National governments across the globe are dealing with the issue in different ways, but one overarching aspect of control and mitigation can be seen in the oversight and regulation of the electric energy industry. One significant challenge facing each nation is the cost to lower carbon emissions and the question of who will pay the additional cost for compliance. Though the cost issue is significant, a much more difficult question is whether any decision on lowering emissions can make
In the absence of federal legislation, states have the liberty to address climate change and formulate policies that mitigate greenhouse gas (GHG) emissions. Texas and California have similar deregulated energy markets and economic goals, yet have pursued different policies, providing a fitting opportunity for Texas to analyze, compare and consider California’s comprehensive law and regulations designed to mitigate GHG emissions. Key focus areas include electricity generation and use , transportation, and industry . Given the comprehensive focus of energy policies, this report specifically emphasizes electricity generation and use. ,
The issue of carbon emissions is an important one not only from an environmental perspective but also an economic one. While reducing carbon emissions is an important one for the health of human beings as well as that of the environment, the larger question is what type of policy strategy is best for both reducing such emissions which might have an impact on efforts to mitigate the effects of pollution on climate change. While ther are options to consider which does not rely on economics-- technological or output standards achieved by command and control regulations--they are often fraught with political resistance by industry because they do not allow industry to make any choices or play a role in solving the problem of
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).
On August 3, 2015, President Obama announced new carbon pollution standards for power plants under the Clean Power Plan (CPP).[1] The purpose of the plan was to decrease carbon dioxide (CO2) emissions to promote better air quality. This plan will impact not only coal fired power plants and the coal industry, but also individuals who live around them and the greater populous. This paper seeks to answer if such a plan should go forward and the impacts of such a plan on the parties listed above. To answer this question, this paper will look
“The idea is that even if we are skeptical about what science tells us about global climate change, we are responsible for taking care of the planet for future generations; so the responsible thing to do is to take measures now that – if the scientists are right – will slow and ultimately stop global climate change”(Environmentalism Handout, 1). This means that it’s time to get involved in possibly changing global warming whether an individual believes it or not. The state should create new laws such a tax on the use of carbon to decrease greenhouse gases or create a large incentive for the installation of renewable energy methods. If the government got involves the issue of climate change could change. The state hasn’t been involved as the environment is changing. “Even at current temperatures, billions of tons of land ice are melting or sliding into the ocean. The sea is also absorbing most of the heat trapped by human emissions. Those factors are causing the ocean to rise at what appears to be an accelerating pace, and coastal communities in the United States are beginning to spend billions to fight increased tidal flooding. Their pleas for help from Congress have largely been ignored” ”(Gillis, 2). In addition to these new laws that could be used to diminish the effects of global warming, it’s important to take into
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.
But based on the previous analysis, for Canada, the method that can impact carbon dioxide emissions the most is the carbon tax system. A proper carbon tax will deter fossil fuels and encourage clean energy (Carbon Tax or Cap-and-Trade?, 2014). The carbon tax will provide a predictable price for carbon dioxide emissions for Canadians. As well, with the carbon tax system, there is more motivation to adhere to regulations because it will become a standard. The revenue generated from the taxation will also assist Canadians by ultimately facilitating greener practices by subsidization and funding environmentally conscious research. Finally, the practicality of reducing emissions under a carbon taxation system is much more functional than the cap-and-trade program. The carbon tax system has been cited to both grow the economy while reducing emissions. That is why a carbon tax system is a superior approach to the experimental cap-and-trade program for reducing emissions and growing the economy (Brander,
Cap-and-trade is a program which uses a market-based mechanism to control greenhouse gas emissions, the primary driver of global warming. The “cap” sets a limit on emissions, which is lowered over time to reduce the amount of pollutants released into the atmosphere. It limits emissions in electric power generation, natural gas, transportation, and large manufacturers. The “trade” creates a market for carbon allowances, leading to more cost-effective pollution cuts, and incentive to invest in cleaner technology. The less they emit, the less they pay, so it is in their economic incentive to pollute less. Each allowance (typically equivalent to one metric ton of carbon dioxide) are auctioned or allocated to regulated emitters on a regular basis.
For example, the government claimed that using Greenhouse Gas Reduction Account funds to subsidize electricity prices would produce 3 Mt in emission reductions. We found no evidence to support this claim and concluded that subsidizing electricity rates is not an acceptable use of these funds. Fortunately, the government is no longer proposing to divert Greenhouse Gas Reduction Account funds in this way.
Tremendous amounts of carbon dioxide are released into the atmosphere every day and the consequence is the destabilization of Earth’s climate and damage to existing and endangered ecosystems. In order to avoid these ramifications, carbon emissions must be reduced. Industrial nations like the United States rely heavily on the burning of billions of tons of fossil fuels, such as coal, oil and natural gas, as their primary source of energy generation. Unfortunately, this has led to the United States being one of the top leaders in carbon emissions in the world along with India and China (Woodard, 2007, pg. 27). A proposed solution that has already been implemented in several nations is the carbon tax (CO2 tax), which puts a price on and taxes the carbon dioxide emitted from the burning of fossil fuels and makes polluters pay the price for the emission of their negative externalities into the environment. As fuel follows through with the combustion process, carbon dioxide is released into the atmosphere where it remains. The carbon dioxide traps the heat in the Earth’s atmosphere leading to a rise in global warming and climate change (Carbon Tax Center, 2016a, What’s a Carbon Tax section, para. 2). A carbon tax can quickly and easily be implemented by the United States federal government and has the potential to conserve the environment by reducing carbon emissions,
Briefings on EPA’s Clean Power Plan: How state emission budgets were established, and legal (reasonableness and fairness) issues.
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