There are so many arguments for and against cap and trade and a carbon tax, that I can't keep them all straight.
| topic
| cap and trade
| carbon tax
| references
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| overview
| Musical chairs. If you have a chair, you're allowed to pollute. If you reduce your pollution, you sell your chairs to those who can't figure out how to reduce their pollution yet.The net pollution goes down. Every couple years, the government takes some chairs out of the room and the cost of chairs goes up because the supply is lowered.
| Carbon-emitting fuels are taxed when they are mined or when they enter the country. The increased cost in the reflected throughout the supply chain. The tax increases over time on a predictable schedule.
Tax and Dividend: A variation on a plain tax that dictates that all money from the tax must be returned to consumers each month. This will help offset the increased price of goods. It also encourages low carbon living because if you drive an SUV, you're refund won't account for how much extra you pay. If you have a small carbon footprint, you actually make money off of the refund check.
| James Hansen - Tax and Dividend
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| simplicity and regulation
| Impossible to regulate. Takes an army of people running around to get measurements and enforce standards.
| Really easy to regulate. Just tax oil and coal as it is mined or imported. Also, Americans are looking for a simple, non-corrupt system with the current state of the finance sector.
| Yale Environment 360
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| predictability
| Just like the stock market, it can rise and fall at any time. The cost of a permit fluctuates quite a bit.
On the other hand, the amount you must reduce your emissions is very predictable because that the metric that is used. You know that you must lower your emissions by 17% by the year 2020.
| A carbon tax that increases over time is extremely predictable. It allows businesses and investors to know exactly what is coming and not have to worry about high risk scenarios.
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| metric used to set goals
| Is based off of emissions so when you set emissions goals, you know that you're meeting them on schedule (assuming no huge in the system)
| The tax might not be set at the right price to actually create the incentive to reduce pollution. Taxes aren't based on pollution, they are based on an arbitrary price that we hope the markets will respond to. The tax is increased over time, but it's hard to predict at what point the market will start responding to it.
| FiveThirtyEight.com
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| detecting corruption
| Hard to detect corruption. Was the tax actually imposed? Especially hard in foreign counties
| Relatively easy to detect corruption in foreign counties. Just put a meter there to see the emissions.
| NYT
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| people power
| Environmental groups could purchase permits off the market to lower the cap themselves.
| The tax is fixed and environmental groups couldn't purchase permits to decrease the supply (and increase the costs)
| FiveThirtyEight.com
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| Political realities
| "Politically viable"
| "Not politically viable" because Americans have a tax-phobia
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| Imported goods
| Difficult to apply a cost for the amount of carbon used to make an imported good. Obviously we don't want to export all our jobs because it is more expensive to manufacture goods, so we need to deal with the increased cost of goods here. There is not direct way to tie imports into the cap and trade market, but there are ways to charge imports in addition to the cap and trade system.
| Very easy to apply an import tax as part of the carbon tax. The import tax could actually be used under either system.
| Yale Environment 360
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| giveaways
| Giving away permits for free to polluting industries might be bad. But with the SO2 cap, all permits were given away for free. The polluters still had an incentive to reduce pollution so they could sell thei permits on the market.
| None. Unless some industries made their carbon an exception to the rule.
| NYT
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