In order to limit climate destruction, multiple avenues of reduction will need to be combined. Preventive, protective, and rehabilitative programs must be combined to allow the planet as we know it to thrive. In order to meet this goal, economists have looked for ways to maintain the free-market economy that many countries thrive off (such as the US and China), but still regulate most major industries. So far, two of the most well-supported plans are the carbon tax and a cap-and-trade program.
The carbon tax works pretty much how it sounds: companies are taxed for however much carbon they emit. This program has two main problems: burdening low-income citizens and defining the carbon tax. The carbon tax could potentially cause companies to have to make up for the income lost to the tax by increasing the prices of their products. However, this would likely be a short-term effect and may not even happen at all as the carbon tax would remove some other loftier taxes that carbon emitters already face. However, gauging the worth of emissions is an extremely delicate process and that has raised concerns from both sides of the spectrum. Nobody is quite sure how much to tax per tonne of emissions. Lower estimates plan for around $40 per metric tonne of carbon releases, but this label would be far too low to have any major effect on US emission levels. The UN estimates that an effect carbon trade would be $145 per metric tonne of carbon, a much more substantial price tag.
Although the above “price tag” issue prevents the carbon-tax from being enacted across the US, the program still has many pros. This program takes more of a “top-down” approach to taxing carbon by making the actual emitters pay the burden of their practices. This program is also supported by some major emitters like EXXON. For these companies, the carbon tax essentially consolidates some other laws under one umbrella. This would also eliminate the need for some newly proposed clean-energy programs (eg. CA’s proposal to eliminate the sale of gasoline cars by 2035). Additionally, the carbon tax program could drastically boast economic growth for certain industries (like solar, wind-power, geothermal) and would increase the federal reserve.
The other economic model for lowering carbon emissions utilizes the market system to keep the government relatively uninvolved in finance, but still prevents high emissions. Under a cap-and-trade system the federal, or state, government sets a limit (ie. “cap) on how many tonnes of emissions a company can release in a given year. This allotted amount is given out in “permits” which are divided out every year. If a company is under its carbon emissions for the year, they can divy out and sell their remaining permits to other emitters. Those who go over their emissions have to, in effect, pay (ie. trade) for a larger cap. Each year this program is in place, the cap amount will decrease across the board, making everyone’s emissions goal lower and lower.
Like with the carbon tax, this program can run into issues if the cap is set to high, but in general it is a less drastic approach than the carbon tax. Many states have enacted the cap-and-trade program and seen beneficial results. California saw a 10% decrease from 2015-2018 in emissions after enacting their cap-and-trade program. The RGGI program in the northeast US created a cap and trade program across 11 states. Within the first three years the program is estimated to lower electric bills, increase consumer and company energy efficiency, and create 3,000 new jobs. The cap-and-trade program is also gaining traction in China because it is deemed less economically burdensome than the carbon tax.
Charlotte R
The Carbon Newsprint
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