Cap and trade is a scheme that allows the business to limit the number of carbon emissions they emit into the environment for a certain period of time. So, in order to better understand this subject, this article lists the pros and cons of a cap and trade.
Pros of cap and trade | Advantages of cap and trade:
- It creates new economic resources for industries.
- The average person can create change.
- It could help to fund alternative energy resources.
- There is a predetermined maximum level of emission.
- It can be a way to supplement taxpayer resources.
- Cap and trade can work with a carbon tax.
- Thie system can work to reduce another emission as well.
- Cap and trade eliminate the need for another tax in the economy.
- It creates a specific total cap that is then split into allowances.
- The overall cap in this system is gradually reduced over the years.
- Credit may be purchased by agencies in order to retire them.
- Cap and trade increase government revenue.
- Cap and trade encourage the pursuit of ambitious climate change goals.
Cons of Cap and trade | Disadvantages of cap and trade:
- Some credits are artificially high in price.
- The government can retire emission credits.
- Many of the emission credits are just given away.
- The emission credits are almost always cheaper than converting to friendlier resources.
- Emission credits can be artificially high or low.
- There is no consistency available unless a global cap and trade system is available.
- It does not encourage some industries to change their behaviour.
- The different nations may have different standards as to what a maximum cap should be.
- It would create a higher price for goods and services.
- It is relatively easy to cheat the system.
- The cost of implementation would be very high in the US.
- It does not encourage reductions beyond target levels.
- The caps on this system must be rigid for them to work.
Thank you for reading this article. If you have any queries regarding our article on the pros and cons of Cap and Trade then do comment in the comment section below.
Explore more information: