Cap an Trade Essay

735 WordsApr 4, 20133 Pages
George Cohen Economics Carbon Emissions Cap and Trade The IPCC predicts that if greenhouse emissions continue to rise at their current rate, there will be a 3 degrees Celsius rise in average world temperature. Because of these calculations, precautions need to be taken in order to reduce the amount of Carbon emissions. The U.S. as a country could put a tax on carbon, it could add subsidies to prevent use of greenhouse gases, or it could put in a “cap and trade system”. The cap and trade system uses a market-based cap and trade system, which limits the amount of carbon that can be emitted without breaking the law. The cap and trade system, in part due to the precision to which it can limit carbon emissions is the best way to reduce carbon emissions. A government or a controlling body of a country or nation generally controls a carbon trade system. If it is a government, the government will decide how much carbon can be emitted per year by the entire country. The government divides that amount accordingly to each company based upon the size of company and the amount of business that they do. Once the government has given out the amounts of carbon allowed to be released, companies can trade each other their respective amounts of carbon. (ClIMATE CHANGE) A carbon cap is beneficial because it is guaranteed whereas subsidies and taxes don’t necessarily make companies lessen their greenhouse gas emissions. The cap and trade system will also lead to other ways of reducing emissions. Subsidies wouldn’t be necessary because eventually people would use different methods to get energy than to use greenhouse gasses anyway. The cap and trade system has lower costs to the economy then subsidies or taxes(IETA). Combining trading with a price for emitting CO2 also gives the lowest cost outcome by finding the most efficient places in the market. It also gives a

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