A look in Cap-and-Trade

A cap-and-trade system appears to be the overwhelming favorite among the solutions to reduce our greenhouse emissions in America. However, not many fully understand whats entailed with a cap-and-trade system. In addition, Americas economic woes may leave many politicians reconsidering how we will solve our environmental troubles. What's not surprising is that we are not the only country which is dealing with environmental issues. Canada, our neighbor to the north is also trying to put forth an effort in reducing green house emmisions. In British Columbia there have been huge debates over whether a cap-and-trade system is truly the best solution.

The Vancouver Sun recently put out an article where two of the major parties in B.C. are in a major argument over the issue. The Liberals want to impliment a carbon tax and the New Democratic Party wants to see a cap-and-trade policy. Two different policies which look to provide similar results. What are they and which would work best considering our economic conditions?

A carbon tax is as simple as the name. With a carbon tax a tax would be placed on all fossil fuels. A carbon tax would encourage industries to search for alternative fuels while at the same time we would receive funds from those who continue to produce heavy emissions. Its a tax that would be easy to enforce and granted that no loopholes are involved would be very effective. On the other hand you have a cap-and-trade system. In this system the government implements a set limit on the amount of emmisions an industry is allowed to produce. If a company fails to maintain their emissions below the limit they will have to pay a cost similar to a fine. However in a cap-and-trade system a monetary value would be assigned per each tonne of emmision which would be known as permits. This would allow those who significantly reduce their emmisions to trade or sell away permits. Once again it encourages companies to reduce emissions, but the difference here is that there is a set limit so you're virtually guaranteed to reduce emmissions to a point that would be beneficial for the environment.

Personally I feel the best thing that can be done at the moment in the U.S. is to implement a carbon tax. Altough a cap-and-trade program would be ideal, now is not the right time to set limitations on already struggling industries. At Carbon Tax Center they point out flaws in having a carbon tax. For starters many industries would just pay the tax and avoid alternative fuels. Not to mention that most industries would most likely raise prices to make up the costs. The positive consequences however are that we would at least be setting a precedent towards moving away from fossil fuels and looking for incentives to use alternative eco-friendly fuels. Its a plan that would get us started in the right direction and would be a good compromise for all.