Carbon Tax Versus Cap-and-Trade - Paper Example

Introduction

Many climatic and environmental concerns have been credited to global warming resulting from carbon emissions. It is generally accepted that human industrial activities have a hand in exacerbating the situation by contributing towards carbon dioxide emissions. This gas rises to the atmosphere and forms a blanket that leads to the greenhouse effect. As a result, the relevant authorities are striving to come up with ways to curb the emission of greenhouse gases. The carbon tax and the cap-and-trade are two of the most prevalent methods of coercing industries to check their level of carbon dioxide emissions. The cap-and-trade model has however proven to be the better alternative.

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Global Warming

According to the Copenhagen Accord, global temperature increases should be maintained at a level below 2 degrees Celsius (3.6 degrees Fahrenheit) (McKibben, 2012). The accord called for deep cuts in global emissions as one of the most efficient ways of maintaining the increase in global temperatures at 2 degrees Celsius or lower. Recent evidence has, however, shown that this figure is far too lenient. The temperature of the earth has risen by only 0.8 degrees Celsius, and there have been adverse effects such as the melting of one-third of the ice in the Arctic region (McKibben, 2012).

Scientist estimate that by mid-century, human activities can inject about 565 gigatons of carbon dioxide into the atmosphere and reasonably maintain the 2 degrees Celsius threshold (McKibben, 2012). This global carbon budget, however, is under the threat of ever-rising global temperatures. The earth's temperature has already increased by 0.8 degrees Celsius. Scientists have concluded that the temperatures will still rise by another 0.8 degrees even if the emission of carbon dioxide was halted because previous emissions still contribute to overheating of the atmosphere. Emissions in 2011 reached 31.6 gigatons, a 3.2% increase of the prior year (McKibben, 2012). Human activities are causing a steady rise in carbon pollution, and the 565 gigaton target is looming closer every year.

There is a third statistic that should be a primary cause of worry to everybody. 2795 gigatons represent the total fossil fuels that are already contained in the oil, coal, and gas reserves of the big corporations and their host countries. This figure of 2795 gigatons, according to the Carbon Tracker Initiative, far outstrips the 565 gigatons threshold set by scientist, and that is a scary proposition (McKibben, 2012). Many leaders are talking a big game about reducing the carbon footprint, but they turn around and sign deals to increase the exploration of fossil fuels. The figure of 2795 gigatons is five times what we can comfortably emit without raising temperatures beyond 2 degrees Celsius.

These numbers provide the intellectual clarity to understand this predicament by explaining how much we can burn safely. The primary cause of emission is known, but there is a feeling that there is no willpower to advocate for clean, renewable energy. The massive profits have made the oil, coal, and gas industry to become too powerful even for environmentalists. The best idea could be the imposition of a price on carbon to force these companies to check their amount of emissions. Lack of such measures will see companies disposing carbon into the atmosphere without regard for the safety limit.

Global industrial emissions, including those related to deforestation, will reach 41 billion tonnes annually by 2020 under the current conditions. The EPA estimates indicate that 50% of the greenhouse gas emissions in the US are directly attributed to industrial activities. Globalization activities are responsible for the significantly huge emissions from China, where most companies have taken their manufacturing operations. Considering the relationship between climate change and carbon dioxide, it is evident that industrial pollution is a contributor to the global warming problems occurring (Sassen, 2014).

Likely Impacts

The rising water temperatures in the North Pacific have reached unprecedented levels and caused significant changes in marine life. It has led to a disruption in the movement and feeding patterns of whales (Holthaus, 2015). Humpback whales have become an increasingly common sight off the shore of California although they only appear occasionally. The vast numbers and closeness to the beach suggest that their habitat is changing. Exceptionally warm waters have led to the concentration of anchovies and krill, a whale's diet, into a narrow strip of considerably cool coastal water (Holthaus, 2015).

The impact of globl warming has also been manifested in various forms of aquatic life. The most massive haul-out of walruses ever to be documented was in 2015 in Northern Alaska (Holthaus, 2015). Scientists discovered more than 35,000 walruses congregated on one beach which was a clear indication that their preferred habitat of sea ice was quickly disappearing. Salmon migration has also been affected by the low river levels and high temperatures since they cannot survive in such conditions. Continued stress of these life forms could jeopardize their reproduction patterns and cause them to decline.

A combination of warm oceans, abnormal wind patterns, and agricultural nutrient runoff is creating dead zones in some coastal regions. The combined elements create a conducive environment for the blooming of algae, which sucks up plenty of the dissolved oxygen in the process. The growth of algae is set to continue creating vast patches of low-oxygen where no marine life can survive (Holthaus, 2015). If these areas continue to grow unchecked, it could lead to the destruction of species-rich ecosystems.

The decline in the plankton population could spell disaster for the marine ecosystem since they form the core of the food chain. Some of the carbon emitted to the atmosphere is absorbed by the oceans and turned into carbonic acid. The acidification causes the pH of seawater to decline, which is traumatic for the plants. Plankton occupy at the base of the marine food chain hence their disappearance could spell doom (Holthaus, 2015) for other species. The acidification is also causing the hard shells that protect mollusks to soften. Studies have indicated that snail shells are already dissolving in the West Coast (Holthaus, 2015). Plankton is very critical in maintaining the balance of life in the seas.

Rising sea levels is an inevitable possibility of climate change (Shaftel, 2018). Sea levels threaten to rise ten times faster than earlier predictions had indicated. An estimated increase of ten feet by 2065 is a chilling possibility since the water would cause astronomical damages (Holthaus, 2015). The resulting economic collapse and forced migrations could threaten the spirit of civilization and make the planet ungovernable. Numerous reports have been warning that oceanfront property may no longer be a sound investment for the future as coasts get inundated by rising water levels. An interactive map from Climate Central has indicated that a significant portion of the Los Angeles coast could be submerged by the rising ocean levels (Wattenhofer, 2016).

Policy Options

A carbon tax, as the name suggests, is the imposition of a fee for the per-unit emission of greenhouse gases in the atmosphere (Laidlaw, 2009).

In a cap and trade system, the government sets the cap, and every company has permits for all units of pollution. Some companies will find ways to reduce their emissions and hence their limit is not used up. The balance can be traded with other firms that have used up their emission allowances ("EBSCO Sustainability Watch," 2009).

The carbon tax model gives companies the incentive to curb pollution since it becomes an added expense in the books ("EBSCO Sustainability Watch," 2009). Companies are all about cutting costs, and hence a high enough tax might inspire reduced emissions. However, some firms might find it cost-effective to pollute if the figure is low. The cap and trade policy is superior because it allows companies to cut down on emissions and make money by trading. The extra opportunity to do business is an attraction for many organizations, and it could spur innovative ways of reducing emissions. Under the cap-and-trade, national schemes are linking with those in other countries to form a broad market for selling abatement opportunities (Kelly, 2009).

The cap and trade system sets the maximum quantity of emissions and leaves the market forces to determine the price of pollution (Kelly, 2009). The tax model sets a precise figure per unit of emission and leaves the firms to determine how much pollution is cost-effective. The cap-and-trade model offers environmental certainty since the emission allowance provides certainty about the environmental impact (Laidlaw, 2009). A carbon tax also has a cost certainty, but it does not determine how much firms will reduce their emissions. While taxes can minimize emission, the extent of the output reduction is down to s firm's willingness and ability to pay the taxes (Laidlaw, 2009). The best support for a climate change initiative is desired and predictable results, which are offered by the cap and trade policy.

Conclusion

Global warming is a phenomenon that needs urgent intervention. The figures paint a horrifying picture since the planet has almost used up the entire 2 degrees Celsius threshold. Recent events, even when temperatures rose by less than 2 degrees, have indicated that changes are occurring faster than they were predicted. Scientists have determined that another 565 gigatons of carbon dioxide could be injected into the atmosphere without any harm. However, the projected amount is an astonishing 2795 gigatons, which is way more than the safe limit. The best way to curb the emissions is by a cap-and-trade that is flexible and can be monitored while allowing companies to find ways of reducing emissions and earn handsome profits.

References

"EBSCO Sustainability Watch" (2009). Cap-and-trade-systems: Effective market-based solution for controlling emissions? EBSCO Host. Retrieved June 5, 2018, from https://www.ebscohost.com/uploads/imported/thisTopic-dbTopic-1345.pdf

Holthaus, E. (2015, August 9). The Point of No Return: Climate Change Nightmares Are Already Here. Retrieved June 5, from https://readersupportednews.org/news-section2/318-66/31748-the-point-of-no-return-climate-change-nightmares-are-already-here

Kelly, T. (2009, February 14). Greenhouse tax versus greenhouse cap and trade: The debate we never had. Brave New Climate. Retrieved June 5, 2018, from https://bravenewclimate.files.wordpress.com/2009/02/ghgtaxvcaptrade.pdf

Laidlaw, S. (2009, April 16). Carbon Tax Versus Cap-and-Trade. [pdf]

McKibben, B. (2012, July 19). Global Warming's Terrifying New Math. Retrieved July 5, from https://www.rollingstone.com/politics/news/global-warmings-terrifying-new-math-20120719#ixzz21JB2sC8e

Sassen, S. (2014, May 18). Countdown to oblivion: The real reason we can't stop global warming. Retrieved June 5, from https://www.salon.com/2014/05/18/countdown_to_oblivion_the_real_reason_we_cant_stop_global_warming/

Shaftel, H. (2018, June 1). Global Climate Change: Effects. Retrieved June 5, from https://climate.nasa.gov/effects/

Wattenhofer, J. (2016, October 16). Map Shows Parts of LA That Could be Underwater If Nothing's Done to Stop Climate Change. Retrieved June 5, from https://la.curbed.com/2015/10/16/9910258/interactive-map-shows-regions-of-la-that-could-be-underwater-in-2100