The Carbon Cap and Trade Legislation in the Industry - Essay Example

Carbon Cap and Trade Legislation The carbon cap and trade legislation is a system that is a market-based approach aimed at controlling pollution by ultimately reducing carbon emission into the atmosphere. This move was a more democratic answer than imposing a carbon tax that would have affected the country’s economy negatively. The cap sets a threshold on the acceptable amount of a pollutant that can be emitted by a given company per annum, and it penalizes those that exceed the agreed upon quantity. The amount measures in terms of millions of tons of carbon dioxide released into the atmosphere basing the determination process on scientific calculations. Those that succeed in lowering their emission levels are rewarded by earning points, which earn the company allowances that are used to trade. The trade translates to paying less for fewer emissions and leads to innovation and investment because those companies that find it easy to reduce their carbon emissions. It gives them the opportunity to trade their extra allowances with other companies and turn these allowances into dollars. Carbon cap legislation will help reduce the amount of pollutant gases, released into the atmosphere, and contribute to mitigating the effects of global warming, which affects the whole globe irrespective of where the emissions are taking place. Am going to discuss the effects of the carbon cap and trade legislation, on global warming, and the economies of the entities involved and the nation, as a whole, and at the same time highlight carbon cap and carbon tax systems. The carbon cap and trade system will contribute significantly in reducing pollution in America. This is because the system encourages utilities and companies to increase innovations and inventions, aimed at reducing emissions, or the overall cessation of using conventional energy sources that contribute to pollution. Over time, it will encourage the use of substitute sources of energy like hydroelectric power, wind energy and solar power, which contribute minimally to pollution. The system will see a gradual reduction on the reliance of fossil fuels and their products, which are the prime sources of pollutants that lead to destruction of the atmosphere. The carbon cap will eventually see that even the small players and contributors, of pollution, adapt to new ways of reducing the carbon footprint because of the benefits that will be associated with reduced emission, in production. The enactment and enforcement of the carbon cap legislation was met with restraint from the commencement of the bill’s passage in congress where it was met with hostility by most of the majority in congress (Streeter & Hungerford 401). It passed the congressional debate stage by a narrow margin of approval, which had taken pro-environmental congresspersons a lot of lobbying for its passage. Companies and utilities effectively passed the bill as a law governing the carbon dioxide emission. This made it unlawful for companies to exceed a certain threshold for carbon in metric tons they could release into the atmosphere per annum. Those who do have to pay a fine to a relevant authority that is responsible for overseeing the enactment and adherence to law by these companies. The carbon cap system is seen as a better way of controlling carbon emissions, but there are reservations from some people who think that as the carbon cap becomes more rigorous over time, companies might be forced to buy special permits at high prices to cover their high emission rates. This cost will cost consumers more expenses, which would eventually lead to decreased consumer spending and eventually lead to production cutbacks and job losses (Streeter & Hungerford 290). Carbon cap and trading legislation is also referred to as emission trading scheme, in some countries, where the legislation requires emitters to hold permits, for every ton of carbon they emit, and the level of the cap decides the number of permits available, for each entity. Carbon caps are designed to cause an overall cut, in emissions by, attaching value to the required cuts thus giving value to the allowances earned due to a reduction in levels of pollution elements. In America, there exists an alternative policy to carbon caps policy called the carbon tax, which seeks to add cost to all emissions equivalent in value to the tax levied. This, in turn, causes people to cut back on their levels of emissions so that they can control the magnitude of these taxes on their operations. In a carbon tax system, there is no cap or limitation over the amount of emission that one can produce, but they have to pay for it if they emit no matter how small or large their emission is because everyone has to pay. This kind of system allows individuals, with the resources, to pay to operate, but it acts as an impediment to small-scale operators, who have limited resources, to factor in carbon tax into their operating expenditures (Streeter & Hungerford 356). Compared to the carbon tax, carbon cap is more environmental friendly and ensures an overall reduction in emissions from all industry players. Many people, in the U.S., think that carbon emissions are the leading causes of global warming, and those that substantially contribute to this process are supposed to be regulated by laws. The concerns of an average American on the effects of increased carbon dioxide emission range from its effects on health, the environment and its contribution to the green house effect. Carbon dioxide belongs to a class of gases that are called green house gases that contribute to the depletion of the ozone layer. Destroyed ozone means reduced protection from the harmful effects of the sun, which causes increased global temperatures, erratic extreme weather patterns and melting of the polar icecap. Melting of the polar ice cap leads to rising sea levels that lead to flooding, submergence of coastal dwellings and tsunamis. Carbon dioxide emissions are responsible for the precipitation of acid rain, which corrodes appliances, made of metal, by reacting with them to form carbonates that deface them. Acid rain kills plants in the fields, and it contributes to pollution that happens in oceans and seas. Carbon dioxide also has indirect effects on the environment because it contributes to the green house effects, which is a leading contributor in the destruction of habitats, and unique ecological niches that harbor endangered species of the world. Carbon dioxide has adverse effects on the general health of humans by contributing to respiratory problems and complications like bronchitis and alveoli inflammation. In my opinion, the carbon cap and trade legislation is more environmental friendly because it focuses on overall reduction, in carbon emission, by key players in the industry. Unlike the carbon cap system, the carbon tax does not set a limit to the amount of emission allowed, and this gives a lee way to those with the ability to compensate, for their emissions to go unchecked, and this contributes to increased environmental degradation that is caused by carbon emissions. It does not favor small scale entrepreneurs because it puts them, at a disadvantage because, unlike in the carbon cap system where those who emit less are rewarded with allowances that they can trade in for dollars, it make them pay instead for emitting less carbon dioxide into the atmosphere. Works Cited. Streeter S. & Hungerford T. L. Cap and Trade: The Kyoto Protocol, Greenhouse Gas (Ghg) Emissions, Carbon Tax, Emission Allowances, Acid Rain So2 Program, Ozone Transport Commission, Nox, Carbon Markets, and Climate Change. The Capitol Net Inc, 2010. Print. Read More