Pay The Carbon Tax

Everyone agrees that it’s necessary to begin reducing carbon emission around the world. There is less agreement over exactly how nations should go about achieving a more emissions –free planet. It’s the environment equivalent of Elvis vs. the Beatles: Should nations cap- and- trade carbon emissions or impose a carbon tax on all users? With cap- and- trade programs, governments limit the level of carbon that can be emitted by an industry. Companies that hold their emissions below the cap can sell their remaining allowance on a carbon market, while companies that exceed their limits must purchase credits on that market. Carbon taxes are straighter forward: a set tax rate is placed on the consumption of carbon in any form – fossil – fuel electricity, gasoline – with the idea that raising the prince wile encourages industries and individuals to consume less. At the moment, the cap –and-trade system as the back bone of the current Kyoto Protocol, and helped the U.S. reduce acid rain in the 1990s- but don’t write off the tax just yet. Its supporters argue that a cap-and-trade system, especially one that would be global enough to mitigate the 8 billion tons of carbon the world now emits, would be too difficult to administer-and might be too easily gamed by industries looking to sidestep emissions caps. Cap-and-trade advocates counter that licked all other flat taxes, a carbon levy would disproportionately burden lower- income families, who spend a greater percentage of their income on energy that rich households. So which system will have the largest impact on carbon consumption? A 10% flat carbon tax might reduce the demand for carbon about 5% or less, according to an analysis by the Carbon Tax Center, and environmental advocacy group try may not be enough. Business and government haven’t yet figured out how the two competing regimes can work together, and in the end, the world may need to put both of them to work.