Cap and Trade Emissions Program
Introduction
Global warming has become a global menace that threatens to upset the balance of climatic and weather conditions. These changes may impact negatively on rainfall patterns, climatic seasons, and cause unpredictable weather. Global warming is mainly a direct result of the emission of carbon dioxide and other greenhouse gases into the atmosphere. The emissions damage the protective ozone layer and cause adverse weather and climatic patterns. In a bid to actively reduce emissions the American government introduced cap and trade emissions programs that regulate the amount of gases produced by industries and companies. The cap seeks to lower the rate of carbon emissions, while the trade part of the program involves commercializing the right to produce emissions but at low rates. Cap and trade programs are necessary and important because they encourage the formation of new low carbon technology, they generate government income whilst controlling emissions and they are a proactive solution to the global warming problem.
Cap and trade emissions programs encourage industry stakeholders as well as scientists and innovators to come up with new low-carbon technologies. The most viable solution to the global warming problem is to stop reliance on fuel sources and chemicals that produce carbon emissions. This, therefore, means that developing new green technology will better combat the scourge. The use of caps on emissions has led to out of the box thinking that has led to new technology that is emission-free. In Europe for example, “the European Union emissions trading system has increased low-carbon innovation among regulated firms by as much as 10%” (Calel et al, 1). The trend that focuses on finding better ways of continuing production and manufacturing activities that are carbon-free is the best solution. The development of hydrogen cars, for instance, is an example of how technology can be harnessed to reduce carbon emissions now and in the future.
The use of cap and trade programs is a clever way to generate government revenue while controlling carbon emissions at the same time. It is essentially a genius strategy used to kill two birds with one stone. The government can generate revenue through the trade section of the cap and trade program. The state basically sets a certain percentage target of emissions that all companies should follow. The government then charges a certain amount of fee to permit companies to produce emissions at controlled rates. “The government stipulates that emitters must obtain the right to emit. These rights are either supplied with infinite elasticity at a fixed price or with zero elasticity at a fixed supply” (Murray et al, 3). Companies, therefore, pay for some kind of license in order to be able to emit a certain allowed percentage of carbon emissions. In this way, the government can control harmful gas emissions and still earn revenue.
Cap and trade programs are a proactive solution to the problem of global warming and the resultant climate change. “Global climate change is the most significant environmental issue facing our nation and the world. There no longer is any question that global warming is occurring” (Avi-Yonah et al, 4). Rather than theorize on ways to reduce emissions and the carbon footprint of related industries; these programs take an action-oriented approach to the reduction of carbon emissions. Placing caps and restrictions on the rate of carbon emissions helps most companies to mind their carbon emissions. The penalties enforced also reduce the pollution of the air by large corporations.
Conclusion
In summary, the cap and trade emission program is absolutely necessary and vital in reducing the global carbon footprint by encouraging new green technology, enforcing regulations on emissions and fighting global warming and climate change. The rules and processes set by cap and trade programs help to improve the environment significantly.
Works Cited
Avi-Yonah, Reuven S., and David M. Uhlmann. “Combating global climate change: Why a carbon tax is a better response to global warming than cap and trade.” Stan. Envtl. LJ 28 (2009): 3.
Calel, Raphael, and Antoine Dechezlepretre. “Environmental policy and directed technological change: evidence from the European carbon market.” Review of economics and statistics 98.1 (2016): 173-191.
Murray, Brian C., Richard G. Newell, and William A. Pizer. “Balancing cost and emissions certainty: An allowance reserve for cap-and-trade.” Review of Environmental Economics and Policy 3.1 (2009): 84-103.