Carbon Reduction – a Global Perspective
Nov 9th, 2010 by ckyw88
We all know that global warming and the depletion of non-renewable resources are only becoming more detrimental issues of our earth.
Today, I’d like to hear what you guys think in regards to carbon reduction. There are two popular economic policies that are receiving much debate on the political stage. They are:
1. Carbon Tax
Carbon tax is a policy designed to reduce carbon emissions by putting a tax to internalize negative externalities (paying for the damage that you’re doing to the ozone layer when pumping gas). This method will not immediately dictate the amount of carbon allowance, but will instead provide a steady price for both consumers and producers. With a steady price, markets will naturally be driven to an efficient quantity hence reducing carbon emissions. Carbon tax has a far reach and can collect a significant amount of revenue to be put back into our economy in the form of R&D for sustainability or income redistribution.
2. Cap and Trade
Cap and trade system works by putting a cap on carbon emissions and creating a new market to auction off permits and quotas to the most efficient producers. Companies that use less then their quotas can sell off their unused portions. Cap and trade can theoretically create a more relatively quicker change in our carbon emissions, but seems to have many loop holes. There are many European countries that have already implemented the cap and trade policy.
In both cases, there will be pressures to change to renewable energies and sustainable innovation. I’d like to hear your opinions… so please post below!