Carbon Trading Over Taxes

As the United States moves inevitably toward climate legislation, discussion has shifted from the science to the policy options for slowing emissions of carbon dioxide CO₂ and other greenhouse gases. Some favor a tax on CO₂ emissions—referred to as a C tax (r). Others favor government subsidies (2). If high enough to alter consumer behavior, a carbon tax would reduce emissions by raising the effective price of carbon-intensive energy relative to carbon-free sources. Subsidies may speed development of specific, targeted low-C technologies. But a market-based system with an economy wide cap on emissions and trading of emission allowances would do the same, while having distinct advantages 0). Most important, a cap and trade system, coupled with adequate enforcement, would assure that environmental goals actually would be achieved by a certain date. Given the potential for escalating damages and the urgent need to meet specific emission targets (4), such certainty is a major advantage. A federal cap and trade system could be incorporated into existing emissions-trading frame-works and markets, such as the Kyoto Protocol's international market or sub rational ones like the Regional Greenhouse Gas Initiative. Earth's climate is agnostic about the location and type of CO₂ emissions and is sensitive only to the total burden of CO₂ It makes sense, therefore, to design a climate policy that taps all possible avenues to limit net  CO₂ emissions. Trading of emissions Science news articles across all sectors of the economy addresses this by allowing emitters to purchase carbon offsets from businesses that are able to lower their own emissions below their allocation. If trading were incorporated into an international system, U.S. firms and consumers could meet emissions targets at reduced costs by substituting less expensive cuts in, for example, developing countries, for expensive emissions cuts in the United States. Because investment would be funneled to technologies that reduce CO₂ emissions at the least ant, the overall expense of the program would be minimized. Cutting emissions of pollutants is admittedly notes  complicate crosscutting      CO₂        emissions, and transaction costs can be a factor. Nevertheless, the United States was able to reduce sulfur oxide emissions ahead of schedule and at 30% of the projected cost using a market-based cap and trade system (5). Elimination of lead from gasp. line and phaseout of ozone-depleting chemicals were also facilitated by emissions-trading programs.