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Debate: Cap-and-trade versus carbon tax
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(Difference between revisions)
Revision as of 14:13, 5 September 2010 (edit) Lenkahabetinova (Talk | contribs) (→See also) ← Previous diff |
Current revision (15:33, 7 October 2011) (edit) Brooks Lindsay (Talk | contribs) (→Democratic principles: Does a cap-and-trade system better uphold democratic principles and justice?) |
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*'''[[Argument:The consensus among economists is that a carbon tax is the better approach| The consensus among economists is that a carbon tax is the better approach]].''' | *'''[[Argument:The consensus among economists is that a carbon tax is the better approach| The consensus among economists is that a carbon tax is the better approach]].''' | ||
- | *'''[[Argument:A cap-and-trade system is complicated and entails substantial administrative costs| A cap-and-trade system is complicated and entails substantial administrative costs]].''' The costs of establishing and administering a cap-and-trade system could be substantial. It demands that a cap be set, monitored, and enforced. This is a highly complicated process, given the size of the energy market, and would demand substantial administrative oversight. | + | *'''A cap-and-trade system is complicated and entails substantial administrative costs.''' The costs of establishing and administering a cap-and-trade system could be substantial. It demands that a cap be set, monitored, and enforced. This is a highly complicated process, given the size of the energy market, and would demand substantial administrative oversight. |
*'''[[Argument:A carbon tax is more predictable and less volatile than a cap-and-trade system| A carbon tax is more predictable and less volatile than a cap-and-trade system]].''' A carbon tax is predictable, as are most simple tax systems. A cap-and-trade system, on the other hand, is subject to market fluctuations, speculation, and volatility. This could have a bad effect on energy prices. | *'''[[Argument:A carbon tax is more predictable and less volatile than a cap-and-trade system| A carbon tax is more predictable and less volatile than a cap-and-trade system]].''' A carbon tax is predictable, as are most simple tax systems. A cap-and-trade system, on the other hand, is subject to market fluctuations, speculation, and volatility. This could have a bad effect on energy prices. | ||
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- | ===Reducing emissions: Is a cap-and-trade system better at reducing carbon emissions than a carbon tax?=== | + | ===Reducing emissions: Is cap-and-trade better at reducing emissions? === |
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*'''[[Argument:A carbon tax is less popular and harder to achieve politically| A carbon tax is less popular and harder to achieve politically]].''' The basic problem is that a carbon tax would be a new tax on the public. New taxes are typically unpopular. This makes it hard for politicians to support a carbon tax, as they are beholden to their constituents, and their likely desires to avoid such a tax. | *'''[[Argument:A carbon tax is less popular and harder to achieve politically| A carbon tax is less popular and harder to achieve politically]].''' The basic problem is that a carbon tax would be a new tax on the public. New taxes are typically unpopular. This makes it hard for politicians to support a carbon tax, as they are beholden to their constituents, and their likely desires to avoid such a tax. | ||
- | *'''[[Argument:A carbon tax would also require complicated monitoring and enforcement mechanisms| A carbon tax would also require complicated monitoring and enforcement mechanisms]].''' In a carbon tax, emitters would pay a tax for every ton of carbon emitted. This requires that the government know precisely how much carbon is being emitted by energy producers. This is not easy to determine, and requires that a government put in place monitoring mechanisms. Deploying these mechanisms universally would be very complicated, expensive, and require much administration. Then, ensuring that all these monitoring devices operate properly and that all energy producers comply with the tax would also involve a substantial administrative burden. This would be equally as complicated as a cap-and-trade system. | + | *'''[[Argument:A carbon tax would also require complicated monitoring and enforcement mechanisms| A carbon tax would also require complicated monitoring and enforcement mechanisms]].''' In a carbon tax, emitters would pay a tax for every ton of carbon emitted. This requires that the government know precisely how much carbon is being emitted by energy producers. This is not easy to determine, and requires that a government put in place monitoring mechanisms. Deploying these mechanisms universally would be very complicated, expensive, and require much administration. Then, ensuring that all these monitoring devices operate properly and that all energy producers comply with the tax would also involve a substantial administrative burden. This would be equally as complicated as a cap-and-trade system. However part of the monitoring cost could be absorbed privately by companies who wish to sell their credits, as high price is in their interest. |
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====No==== | ====No==== | ||
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- | ==="Progressive"? Is a cap-and-trade system more "progressive" than a carbon tax, and would this be a good thing?=== | + | ==="Progressive"? Is cap-and-trade more "progressive" than carbon tax?=== |
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====Yes==== | ====Yes==== | ||
- | *'''[[Argument:A carbon tax is "regressive"| A carbon tax is "regressive"]]:''' A "regressive" tax is one that disproportionately burdens poorer groups. Energy consumption generally makes up a larger portion of the personal budgets of poorer groups. Because energy consumption would be taxed equally across social groups with a carbon tax (it's a [http://en.wikipedia.org/wiki/Flat_tax "flat tax"]), the costs of the tax would disproportionately affect poor groups. | + | *'''A carbon tax is "regressive"''' A "regressive" tax is one that disproportionately burdens poorer groups. Energy consumption generally makes up a larger portion of the personal budgets of poorer groups. Because energy consumption would be taxed equally across social groups with a carbon tax (it's a [http://en.wikipedia.org/wiki/Flat_tax "flat tax"]), the costs of the tax would disproportionately affect poor groups. |
*'''A cap-and-trade system is "progressive".''' [http://www.terrapass.com/terrablog/posts/2006/08/carbon-tax-vs-carbon-market-who-would-win-in-a-fight.html TerraPass, "Carbon tax vs. carbon market: who would win in a fight?", 9/15/06] - "Tradeable carbon credits, on the other hand, could conceivably result in a net transfer of wealth to the poor. Although the poor spend a bigger proportion of their income on energy, the wealthy consume a far greater amount of carbon in absolute terms. So under a cap-and-trade regime, we would expect the poor (and the energy thrifty) to have excess credits to sell to their more profligate neighbors." | *'''A cap-and-trade system is "progressive".''' [http://www.terrapass.com/terrablog/posts/2006/08/carbon-tax-vs-carbon-market-who-would-win-in-a-fight.html TerraPass, "Carbon tax vs. carbon market: who would win in a fight?", 9/15/06] - "Tradeable carbon credits, on the other hand, could conceivably result in a net transfer of wealth to the poor. Although the poor spend a bigger proportion of their income on energy, the wealthy consume a far greater amount of carbon in absolute terms. So under a cap-and-trade regime, we would expect the poor (and the energy thrifty) to have excess credits to sell to their more profligate neighbors." | ||
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- | ===Fairness to producers: Is a cap-and-trade approach more fair to producers than a carbon tax?=== | + | ===Fairness to producers: Is a cap-and-trade more fair to producers?=== |
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- | ===Democratic principles: Does a cap-and-trade system better uphold democratic principles and justice?=== | + | ===Democratic principles: Does cap-and-trade better uphold democratic principles?=== |
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*'''US cap-and-trade systems:''' | *'''US cap-and-trade systems:''' | ||
**'''[[Argument: US cap-and-trade in sulfur dioxide was successful| The United States' cap-and-trade system in sulfur dioxide has proven a major success]]:''' | **'''[[Argument: US cap-and-trade in sulfur dioxide was successful| The United States' cap-and-trade system in sulfur dioxide has proven a major success]]:''' | ||
- | **'''[[Argument:The Chicago Climate Exchange is a success| The Chicago Climate Exchange is a success]]:''' | + | **'''[[Argument: The Chicago Climate Exchange is a success and model| The Chicago Climate Exchange is a success]]:''' |
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Current revision
[Edit] Is a cap-and-trade system preferable to a carbon tax in reducing carbon emissions? |
[Edit] Background and contextThe debate between cap-and-trade and carbon taxes is very prominent. As concerns have arisen about global climate change and human greenhouse gas emissions, the question has arisen, what should be done? Many say that the most important avenue for cutting carbon emissions is market systems and incentives. Cap-and-trade and carbon taxes are two of the most prominent approaches to creating such market incentives to cut emissions. Both place a price on carbon emissions from businesses, giving them an incentive to emit less. A carbon tax places a straightforward tax on all carbon emissions. All emitted carbon is treated the same, under such a system, carrying the same price for a business. Under a cap-and-trade system, caps are set for businesses, requiring that they emit less than their caps. If they succeed, they receive carbon credits in proportion to how far below their cap they have reduced emissions. These credits can then be sold for a profit to companies that have failed to reduce emissions below their cap and whom are subsequently required to buy credits to make of the difference. In the United States, the debate has been particularly contentious over the years. The Obama administration planned on implementing a cap-and-trade system. Yet, the debate continues.
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[Edit] [ ![]() Economics: Are cap-and-trade markets more economical than a carbon tax? | |
[Edit] Yes
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[Edit] No
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[Edit] [ ![]() Reducing emissions: Is cap-and-trade better at reducing emissions? | |
[Edit] Yes
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[Edit] No
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[Edit] [ ![]() Feasibility: Is a market-based cap-and-trade system more feasible than a carbon tax? | |
[Edit] Yes
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[Edit] No
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[Edit] [ ![]() "Progressive"? Is cap-and-trade more "progressive" than carbon tax? | |
[Edit] Yes
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[Edit] No
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[Edit] [ ![]() Fairness to producers: Is a cap-and-trade more fair to producers? | |
[Edit] Yes
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[Edit] No
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[Edit] [ ![]() Fairness to consumers: Would a cap-and-trade system be more fair to energy consumers? | |
[Edit] Yes
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[Edit] No
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[Edit] [ ![]() Democratic principles: Does cap-and-trade better uphold democratic principles? | |
[Edit] Yes |
[Edit] No
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[Edit] [ ![]() Case studies: What do the existing case studies suggest? | |
[Edit] Yes |
[Edit] No
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[Edit] Motions:Market mechanisms are preferable to regulatory approaches in reducing carbon emissions. [Edit] In legislation, policy, and the real world:[Edit] See also
[Edit] External links and resources:
[Edit] Books: |