Cap and trade versus a tax on carbon as a mechanism for reducing greenhouse gas emissions (200 words)

One distinct advantage of cap and trade versus a carbon tax as a policy mechanism for reducing GHG emissions is that it allows us to meet any carbon emission goal we decide upon simply by setting the carbon cap at that level. In this scheme carbon credits would be traded in the market place, allowing entrepreneurs to use their own ingenuity to determine where and how the reductions actually take place. One big drawback to this plan is that the costs and overall effect on the economy are difficult to predict, and in these times of extreme economic turmoil, this uncertainty could be a tough pill to swallow. Another challenging aspect of cap and trade is the extreme complexity involved in the accounting for emissions from each source. Alternatively, a tax on carbon will certainly lead to decreased emission and at a more predictable cost. However, the actual reductions are not easy to predict and therefore the tax structure will need to be adjusted regularly. Decreasing the tax would be easy for politicians, however if the tax needs to be increased to meet our emissions goals (a likely scenario), it will be a very difficult political maneuver.

Leave a Reply




You can use these HTML tags

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>