Posted by: Tony Carson | 26 October, 2007

Cap-and-Trade vs Carbon Tax

The US is debating which way to go: Cap-and-Trade vs Carbon Tax.

According to this Christian Science Monitor article: A tax on carbon to cool the planet:

Cap-and-Trade: “may put the US on a knowable track to, say, an 80 percent reduction in carbon emissions by 2050. But the flaws in cap-and-trade plans as experienced in other nations – their complexity and vulnerability to fraud and special-interest lobbyists – would reduce the intended effect. They also take a long time to set up and get working right. And, in the end, they also raise energy prices for consumers, just not as directly as a tax.

Carbon Tax: the problem with this is a “three-letter reason: T-A-X. From the start of Capitol Hill’s debate on global warming, the notion of taxing all uses of oil, coal, and natural gas has made lawmakers look for less direct ways to wean the nation off fossil fuels and onto alternative energies.

The World Resources Institute calculates that a tax of $15 per ton of carbon-dioxide emissions would double the costs for coal use and raise gasoline prices about 13 cents a gallon (or about 5 percent, at today’s prices). Natural-gas prices would rise less than 7 percent. That would result in a 12 percent reduction in CO2 emissions.

With Europe’s cap-and-trade system faltering, the US should be a leader in using a carbon tax, even if big polluters such as China don’t follow. As a last resort, the US could tax goods from countries that fail to cut their carbon emissions.

A carbon tax is not the whole solution. Regulations will still be needed, such as stiffer fuel-economy standards for cars and trucks. And the US should fund research into alternative fuels, too. All it takes is the political will to act.



  1. Cap’n Trade is a load of bollocks. Pollution in any form is a negative. We should tax negatives, I don’t care how negative it sounds. If you choose to object to environmental constraint, pay the penalty. Use those funds to incentivize renewable industries and make energy more efficient.

    Or, lessen taxes on responsible businesses. There we have a much more absolute incentive based scheme.

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