Carbon Tax vs. Cap-and-Trade
If I were elected leader, I would support a Carbon Tax system for Carbon Emissions instead of a Cap and Trade system.
A carbon tax gives incentive for companies to not pollute. According to Carbon tax vs. Cap-And-Trade: Which is Better?, "A carbon tax..gives firms...an incentive to reduce pollution whenever doing so would cost less than paying the tax." Thus, taxing firms would actually directly help the environment because carbon emissions would be reduced.
In addition to helping the environment, cap-and-trade takes away revenues from the government that could be used to help the nation. In Carbon tax vs. Cap-And-Trade: Which is Better?, it states, "With cap-and-trade...permits are given out for free initially (known as "grandfathering")...Grandfathering...deprives the government of valuable revenues, which it could raise in auctioning the permits initially, and which could be used to reduce other taxes." The revenues that the cap-and-trade system denies the nation from could be used to improve the nation greatly. Depriving a nation of revenue that could be used to lower taxes is counter-productive. The people will be less inclined to actually care for the environment if they're taxes are extremely high.
Finally, while cap-and-trade does provide "certainty about the quantity of emissions", it also provides uncertainty of cost. Having uncertainty of cost is inefficient and ineffective, as companies will not have the assurance of how high or low the costs will be.
Attached below is what a Carbon Tax vs. Carbon Cap-and-Trade graph would look like:
I disagree with your point of view. Yes, the carbon tax does have a stable and definite pricing system, unlike the the cap and trade method. But the carbon tax has no limit on the units of production given, when the cap and trade method does.
ReplyDeleteI disagree with your opinion, due to the extreme difficulty of setting the carbon tax. In many ways carbon tax is better than cap and trade, however carbon tax is very hard to set because finding the right level of the tax so everyone feels secure is very difficult.
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