Nobody downloaded yet

Cap and Trade System vs. Carbon Tax System - Research Paper Example

Comments (0) Cite this document
Date Any environmentalist are never new to these two terms cap and trade system and carbon tax system. The environmentalist often uses the two interchangeably and often bonder their heads on which system work best in the conservation of the environments…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER95.1% of users find it useful
Cap and Trade System vs. Carbon Tax System
Read TextPreview

Extract of sample "Cap and Trade System vs. Carbon Tax System"

Download file to see previous pages The call for robust action on climate change is coherent and urgent. It is obvious to any environmental conservationist that without firm action the effects from heat waves, droughts, flooding, hurricanes and other adverse weather occurrence will always keep worsening, creating even disastrous human and economic effects (Environmental Justice Matters 2). There are basically some approaches to be opted for:  a direct carbon tax and a cap-and-trade approach.   Climate change critiques have so far seen success in stopping adoption of whichever of these appears to have any momentum (Environmental Justice Matters 2). With cap-and-trade, they not only managed to disorganize and finally prevent enactment of the Waxman-Markey bill in the 110th Congress, but were able to tar cap-and-trade as a critically uncalled for strategy in the general political dialogue – notwithstanding its prior consensus success with SO2 and NOX (Environmental Justice Matters 2). Economists hold the view that, if the market is left to operate freely, greenhouse gas emissions will be too much, since there is not enough incentive for firms and households to cut emissions. Out of that, they propose the polluter pays principle and fixing a price on carbon dioxide and other greenhouse gases (Hedges 1). This can be made possible through either a carbon tax or a cap-and-trade scheme. A carbon tax imposes a tax per unit of greenhouse gas emissions and gives firms and households, an incentive to cut pollution if doing so would cost less than paying the tax (Lavelle 4). Because of that, the size of pollution reduced is a factor of the chosen level of the tax. The tax to be paid is arrived at by assessing the cost associated with each unit of pollution and the costs of controlling that pollution. Setting the tax level too low will cause the firms and households to probably opt for paying the tax and continuing to pollute, above what is optimal for society. Very high and the costs will escalate higher than necessary to cut emissions, impacting on profits, jobs and end consumers (Lavelle 4). On the other side, a cap-and-trade system sets an optimum level of pollution, a cap, and disburses emissions permits to firms that produce emissions. Companies should have a permit to cover each unit of pollution they produce, and they can get these permits either through an initial allocation or auction, or through trading with other firms. Since some firms suddenly find it cheaper to cut pollution than others, trading occurs (Klare 12). While the maximum pollution quantity is put in place in advance, the trading price of permits vary, becoming more expensive when demand is high relative to supply and cheaper when demand is lower. A price on pollution is therefore come up with as a result of setting a ceiling on the overall quantity of emissions. As time passes, the limits become stricter, cutting pollution simultaneously until the desired reduction goal is reached. This is typical example of the cap and trade program enacted by the Clean Air Act of 1990, which cut the sulfur emissions that cause acid rain and it met the target at a much lower cost than industry or government anticipated (Klare 12). It will therefore turn out to be cheaper for some firms to reduce their emissions below their permitted limit than others. These more dynamic companies, who emit below their allowance, can trade their extra with companies that are not able to make reductions as easily. This leads ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
(“Cap and Trade System vs. Carbon Tax System Research Paper”, n.d.)
Retrieved de
(Cap and Trade System Vs. Carbon Tax System Research Paper)
“Cap and Trade System Vs. Carbon Tax System Research Paper”, n.d.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Cap and Trade System vs. Carbon Tax System

Parliamentary System VS Presidential System

...? Parliamentary System VS Presidential System Parliamentary System VS Presidential System Democratic governments are those that permit the nation's citizens to manage their government either directly or through elected representatives. This is opposed to authoritarian governments that limit or prohibit the direct participation of its citizens. Two of the most popular types of democratic governments are the presidential and parliamentary systems (Parliamentary Versus Presidential Governments, 2011) Different types of political systems prevailing in the current world. Broadly speaking, based on the nature of functioning the entire political systems in the world can be classified into tow; democratic systems and totalitarian systems... ....
10 Pages(2500 words)Essay

Adversarial System vs Inquisitorial System

...Adversarial System vs Inquisitorial System There is an ongoing debate concerning which judicial system is better, whether it is adversarial or inquisitorial. Those who support adversarial trials state that it creates an atmosphere that is motivated by the accurate finding of facts as well as providing an advanced quality of legal proceedings. They state that after one side of the proceedings wins the case, there is always a sense of closure for those who have been involved in the case. Moreover, it is always rare to find anyone who has any grievance concerning how the proceedings took place, because they believe that justice has been done. On the other hand, the...
7 Pages(1750 words)Essay

Tax System

...Toulmin Analysis - The ups and downs of flatter taxes Claim: We should have a system of flat taxes on personal income Reason: The flat tax system is required because in the existing system of tax slabs there are a number of shortcomings like; i. The tax return filing system is quite lengthy and cumbersome. ii. Administrative and compliance costs are on the higher side. Often, such problems result in discouraging the marginal tax payers, who don't want to waste their valuable time and effort just to deposit a small amount of tax in government exchequer....
4 Pages(1000 words)Essay

Carbon Tax

...Carbon Tax Carbon tax can be termed as a direct tax imposed on producers on the carbon content emitted in the air. Carbon tax would encourage producers to install pollution control equipment because the imposed tax is so heavy that if one does not install the equipment he will be forced to incur extra expenses, which are not appropriate for business. Eventually the producer will have to bear with the consequences of extra expenses including high electricity bills and slashing of workers. The introduction of carbon tax and the cost of implementing pollution control system have had a significant impact on the firm’s decision making. That is to say firms have decided to go green in the sense that they have had to make some changes... in their...
2 Pages(500 words)Essay

Economics of carbon cap and trade

...on the level of emissions as well as the greatest contributors towards such emissions. Some of the enactments include carbon tax, emission standards, fuel economy standard as well as carbon cap and trade (Ramseur, 205). Carbon cap and trade refers to a system of emission control that uses financial incentives with an aim of encouraging firms and organizations to minimize the level of carbon dioxide that they emit to the atmosphere. A major regulatory body such as the United States Environmental Protection Agency (EPA) sets a general limit or a cap of...
4 Pages(1000 words)Essay

Which system will work best for the United States, a carbon cap and trade system or a straight carbon tax

...Introduction Many people around the world right now are concerned with global warming like never before. One basic truthabout energy dependence is that, sooner or later, the emission of greenhouses gases to the atmosphere is no longer going to be free. It seems that the imposition of legislation to curb carbon emission is inevitable. Many likeminded people have come into agreement that any law that will be put in place should achieve two main things, discourage the use of material that emit a lot of carbon, such as oil, natural gas and coal, and encourage the development and use of energy renewable sources such as solar power. To achieve this, two paths have been proposed,...
4 Pages(1000 words)Essay

Carbon tax and Cap-and-Trade Schemes

... Carbon tax and Cap-and-trade schemes A surge in the number of industries globally has threatened fresh air in the world. In order for them to control this menace the United States came up with the carbon tax. Carbon tax is simply pricing carbon emissions. Industries and households pay an incentive in which they help countries invest in better technologies that provide greener solutions thus reducing on pollution. These incentives discourage the amount of pollution by putting a price on pollution emissions. A carbon tax therefore puts a monetary price on the real costs imposed on the economy and communities by greenhouse gas emissions and global warming. In defining cap and trade system, a government literally puts a cap or limit... on the...
3 Pages(750 words)Essay

Carbon Tax the carbon taxes are the caps set on the level of greenhouses gas emissions in which specific upper limits are set for the allowed level of the green house gas emissions and the permits for polluting are auctioned to the emitters. But unlike the cap and trade system, the carbon taxes can raise revenues which may be used by the governments of the respective countries to settle the environmental issues and combat the ecological hazards caused by these emissions. Also, the necessity of paying the taxes will increase the incentive on the part of the emitters to reduce the level of...
8 Pages(2000 words)Research Paper

Carbon Cap and Trade Research Paper

...permits: auctioning and grandfather system. Under grandfather system, “permits are issued largely free of charge to polluters who are then free to trade them among themselves” (Hahnel 203). On the other hand, auctioned permits attach a price to permits and the lowest (floor) price is usually set below which a permit cannot sell and those ready for use are offered at ceiling price. Certain carbon cap and trade programs permit “carbon offsetting.” Carbon offsetting refers to a situation where a party who is not a member of a carbon trading system devices a...
3 Pages(750 words)Research Paper

Carbon Tax vs. Cap-and-Trade in the USA

...Lecturer: Carbon Tax vs. Cap-and-Trade in the USA Introduction Carbon taxes provide a possibly profitable approach to the reduction of greenhouse gas emissions, and from an economic point of view, carbon taxes re a form of Pigovian tax. They assist in addressing the issue of emitters of greenhouse gases that have not faced the implications of their activities. On the other hand, these taxes may be regressive, as they can either have a direct or indirect impact on the low-income populations in a disproportionate manner. The regressive effect of...
4 Pages(1000 words)Research Paper
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Research Paper on topic Cap and Trade System vs. Carbon Tax System for FREE!

Contact Us