Carbon Tax Versus Cap-and-Trade Approaches to Global Warming - Part 1

by Ugur Akinci - Date: 2007-04-26 - Word Count: 265 Share This!

After making a strong case for Europe to adopt the cap-and-trade strategy back in 1997, the United States took two important steps in the other direction since then.

One such development is the recent proliferation of coal-fired power plants built all over the Mid West. Within the next ten years we can expect to see dozens of coal-plants at the 1,500 MW range spewing out about a million tons of sulphur a year into the atmosphere.

The second development is the re-introduction of the Carbon Tax idea to the U.S. Congress. Dem. Pete Stark of California, for example, who proposed the first carbon tax measure 16 years ago, has again proposed to charge $25 per ton of carbon released.

The Europeans are a bit surprised that, after showing Europe how the free market forces can curb carbon emissions successfully, the US is now intending to go the other route of "taxation at the source".

But the idea is not a new one. President Bill Clinton for example has managed to have a similar tax bill, the BTU Tax bill, go through the House of Representatives only to be stopped at the Senate. If it had cleared through the Senate, the BTU would bring tax liabilities to the "heat content" of different fuels.

The attractiveness of the carbon tax is that it definitely associates a cost to the carbon content of all fuels. Polluting the environment, no matter its scale, is penalized from the get go.

In the cap-and-trade system, on the other hand, many companies might get away with carbon emissions that are below the "certified limits".

(To conclude in Part 2)

Related Tags: global warming, greenhouse gases, carbon emissions, cap-and-trade, carbon tax


Ugur Akinci, Ph.D. is a senior writer and web content consultant with 20 years of experience.

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