Cap-and-trade versus carbon tax: Would a cap-and-trade system be more fair to energy consumers?

  • Puts Onus on Businesses

    A cap-and-trade system puts the onus of carbon reduction on businesses. Consumers can have their own system for reducing their carbon footprint. A cap-and-trade system increases revenue and funding for green energy systems, thereby reducing the cost of electricity generated in such ways. Nuclear, solar, wind, hydroelectric and even biofuels would come down in price in a cap-and-trade system.

  • No, cap-and-trade is not more fair to energy consumers.

    Cap-and-trade and carbon taxes essentially produce the same end. The mechanism differs slightly. Both systems allow consumers to make the decision of when to address emissions versus when to pay for excess emission. In this regard, they are largely equal. However, cap-and-trade systems are often implemented with benefits given to existing industry, "grandfathering" them in. While this is good for those industries, it is not really fair to everyone else. Carbon taxes typically do not have such exemptions; they apply equally. Neither system is more fair to consumers than the other on its own. However, carbon taxes are generally more fair across the board in their implementation.

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