Question

What are the arguments for and against a cap and trade program?

Answer 1

Arguments for cap and trade program :

The main point of cap and trade is its efiiciency . Companies which can reduce their emissions at a low cost will do , and sell the emissions credits to companies who cannot do so. This represents the "trade" aspect. "Cap" part represents that there is some gievn level of emissions which is a maximum.This maximum is pre-determined and certain number of emissions are made. By gradually decreasing the maximum level of emissions , long term goals to reduce emissions can be met. Pro-eniviromental groups can purchase and retire credits to decrease the harmful effects of climate change . This implies that Cap and trade program is inherently efficient.

Other benefit is that the possibility of increased governmental revenue. By auctioning emissions credits, government is able to make a profit. And this profit can used to make energy more affordable to low income families.

Arguments against cap and trade program:

The point of cap and trade is to increase the price of energy.

Cap and trade will harm the poor.

Cap and trade schemes for carbon dioxide have not worked to reduce emissions.

Cap and trade hams energy security.

It only produce marginal impacts on climate.

A cap that is set at the wrong level will cause great economic harm.