Cap-and-trade versus carbon tax: Is a cap-and-trade system preferable to a carbon tax in reducing carbon emissions?

  • Cap-and-Trade Works to Reduce Carbon Emissions

    Energy demand is declining because of cap-and-trade. The good thing about a carbon cap is that it stays below allowable levels and as such, does what it is intended to do. This program has successfully lowered the level of acid rain, improved air quality, and gives electricity generators the option of where to lower emissions. A carbon tax, on the other hand, could make companies simply take their business elsewhere, which would be detrimental to the economy.

  • No, cap and trade artificially inflates prices.

    No, the cap and trade system is not preferable to a carbon tax in reducing carbon emissions, because the cap and trade system gives a few player a monopoly on the market, and the effect of that is to raise prices. This is similar to having a limited number of taxi licenses. Those who have them sell them for inflated prices, which hurts everyone else.

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