Question

Explain the economic concepts underlying a Pigouvian tax in the energy sector.

c. Explain the economic concepts underlying an emissions trading system in the energy sector.

d. Discuss the economic logic underlying urban traffic policies to manage congestion, protect public health, and reduce emissions of air poll

Answer 1

pigouvian tax is a government cost on any activity that creates socially harmful externalities.an externality is an activity that creates a negative effect on others in a society but not necessarily the person who does that activity.it can apply in energy sector especialy in the use of natural gas.about 40 countries impose carbon taxes on companies that burn coal ,oil or gas ,which produce greenhouse gas emissions.these emissions cause climate change,which can bring about more natural disasters,raise sea levels,and increase doughts.the increase in the number of vechicles gives a rise to a state of volatile enviornment,conflicts between cars and pedestrians,traffic ,accidents,air pollution.tackling these problems require multifaceted actions and integrated apporach to road safety produces a marked decline in road deaths and serious injuries.it emphasises on incorporation of urban transport at the urban planning stage with focus on more eqitable road space allocation