The spread of global emissions, the rise of government initiatives within the United States, growing support in the private sector carbon dioxide emissions limits, and in April 2007 decision by the U.S. Supreme Court that the Environmental Protection Agency (EPA) currently has the power reducing greenhouse gas emissions under the Clean Air Act regulation, suggesting that the current U.S. "laggardship" can for many of the rest of the developed world to the problem of climate change in his last days. Then there are credible new scientific evidence that discounts the role of carbon dioxide in the decades-long trend of observed global warming, carbon dioxide emissions in the U.S. probably set, limits. The core of such a carbon dioxide emission limits for the market economy. As a result, it is useful to examine how that could work such a system.
In such a system would enable policy makers to the maximum allowable carbon dioxide emissions cap over time. The federal government could allowances equivalent to the cap. Organizations that emits a significant amount of carbon dioxide would have to possess these rights. You could also buy additional allowances for carbon dioxide emissions than what the certificates that they hold or sell their rights allowed to other persons or entities, if they emit less carbon dioxide than covered by their fees.
Such a system is based on the established principle of comparative advantage. The application of this theory to two hypothetical companies leave their annual carbon dioxide emissions by 1,000 tons reduced per year. A company may, at a price of $ 50 per ton, while the second can only do so at the cost of $ 100 per tonne. If the first entity would be to achieve a reduction of 2,000 tons, it would make sense to do that, and sell the compensation of the additional 1,000 tons of the second company at a price of over U.S. $ 50 per tonne. It would buy the second company, the fee as long as they could do this is useful at a price of less than $ 100 per tonne. This would allow both companies the upper limit and the total cost of meeting the planned reduction of 2,000 tonnes would enable lower than if each company to meet a 1,000-ton reduction in their reach. For example, if the fee for 1,000 tons at a price of $ 75 per ton sold, the first company to a $ 2,500 profit from the transaction would be realized. Meanwhile, the second company compliance costs $ 2,500 less than when he reached on his own goal.
In the creation of such a system would be the U.S. politicians have essentially two options. The grant will be distributed free of charge to the energy industry and other organizations a considerable amount of carbon emissions allowances would be auctioned if the federal government has made in relation to the approval of the electromagnetic spectrum. This allowed the federal government sets broad or targeted tax relief for the economic costs of reducing carbon dioxide emissions limit.
A 25th published April 2007 issue brief from the Congressional Budget Office (CBO) has shown that the auction would dioxide emissions through wider taxation accompanies the least negative impact on the economy. Based on the assumption of a 15% reduction in carbon dioxide emissions in 2010, would the GDP by 0.13% in the auction / broad tax formula can be reduced. But the lowest household income quintile experienced a 2.6% to 3.0% decline in average income after taxes. The top quintile would be an increase of 0.4% to 1.6% seen.
A combination of auctioned allowances with a "single fixed discount to every household combined the least impact on personal income would have. This formula would be a gain of 1.8% in net profit after tax for the lowest quintile and a loss of 0.7% for the highest quintile of lead. However, GDP 0.34% lower.
The allocation of allowances to producers at no cost would have a negative impact on all but the top household income quintile and overall economic growth. See the four lowest income quintile their after-tax income would fall by 1.4% to 3.0%. The top quintile would be an increase of 1.4% to 1.9%. Would reduce GDP by 0.28% to 0.34%.
American history shows emissions trading can be effective in meeting the emission targets that would be adopted by policy makers. Market-based trading of pollution allowances has been proposed as far back as 1960. Emissions trading have been mentioned in the elimination of leaded gasoline and ozone, chlorofluorocarbons (CFCs). They were used to provide substantially the emissions of sulfur dioxide, the acid was for the rain. The use of certificates in reducing emissions of sulfur dioxide is the most ambitious use of these instruments to date. The experience makes this program particularly instructive.
In 1990, Title IV of the Clean Air Act Amendments mandate that national emissions of sulfur dioxide to 50% below the level be reduced from 1980. If this scheme in the direction of the advanced acquisition, different manufacturers argued that the goal was not achieved. On 13 November 1989, the New York Times: "Those natural gas and low sulfur oil instead of coal with high sulfur content to complain, because the Bush proposal, the pollution reduction from existing plants if they want to burn build new what they say is almost impossible. because it say little room for improvement ... ... The oil-burning utilities, that the bill recognizes their valuable efforts, usually sulfur, a pollutant control in the air when the sulfur is burned in the coal or oil. " Similar complaints, but sometimes it connects to the Congress a bill that would cap U.S. emissions of carbon dioxide, even if these cuts would be far less aggressive than the required reductions in sulfur dioxide emissions were.
Less than a decade later, the national emissions of sulfur dioxide had exceeded targets, and at lower costs than expected. Robert N. Stavins, Professor of Public Policy at Harvard University noted in a 1998 Journal of Economic Perspectives article, "The SO2 emissions trading program was successfully implemented targeted emission reductions achieved and exceeded. ... Total abatement costs are significantly less than in the absence of were trading rules ... Prospective analysis suggested in 1990 that he benefits from the program would be about the same ... but the most recent cost analysis indicates that these benefits exceed costs by a very substantial margin. "In April 2000, the U.S. General Accounting Office (now Government Accountability Office) that emissions trading should utilities be allowed "to achieve the required sulfur dioxide emission reductions at a lower than expected costs.
Stavins also offered some insights from this program. He pointed to research showing that the allowances would be auctioned - they were free to manufacturers that the emitted sulfur dioxide - as they have, the cost of sulfur dioxide would trade 25% lower. He noted further that the absolute limit for emissions of sulfur works well and that monitoring and enforcement is important. The Clean Air Act provides harsh penalties against the perpetrators.
Stavins recommended that carbon dioxide emissions trading focus on the carbon inputs of fossil fuels. He said:
The limited size of any previous trading history program as a model for the case of global climate change, serve some attention should be tradable on the system that the U.S. will pay achieved elimination of leaded gasoline. The currency of this system was no lead emissions from vehicles, but the lead content of gasoline. This is also the case of global climate, made large savings in the costs of monitoring and enforcement by establishing trade-related inputs to the carbon content of fossil fuels. This makes sense in the climate case, because - unlike in the case of SO2 - CO2 emissions are roughly proportional to the carbon content of fossil fuels and scrubbing alternatives largely unavailable, at least at present.
All said, emissions trading will probably be introduced in the United States. Historical experience shows that such a program can be effective in meeting specific reduction in carbon dioxide emissions. An optimal design program would accompany the auctioning of allowances by a broad based tax relief, may cause a temporary tax credit for households in the lowest one or two incomes Quintiles, close supervision, tougher penalties for offenders, and instead focus on the production can The program objective inputs.