Carbon Tax vs Carbon Trading

Carbon emissions trading currently underway in many parts of the world including Europe is suggested to be the solution for providing incentives to corporations to reduce their emissions. Lately, I have been thinking about how a Carbon Tax would be a good medium-term solution to decreasing carbon emissions. Economists in generally prefer a cap-and-trade system than a tax. However, tax in this scenario could be more beneficial.

In the past week I came across two articles. One in the Australian Financial Review (not available online) and the other is a report (PDF) by Robert J. Shapiro which was blogged on the Green Wombat.

The AFR article makes some important points. It says that a emission system can take many years to start and even then it mostly effects the ‘stationary energy’ sector. However, a carbon tax can be implemented now on a wide variety of goods and services and can create a better incentive in the short to medium term.

Shapiro’s report suggests that since taxes distort the relative prices of goods (which is the main reason why economists do not like it) it is better to “make the base of the tax as broad as possible, so its rate can be low and most people and activities are affected equally”.

Joshua Rosenau writes on his blog that the Wall Street Journal polled 60 economists and a majority backed a carbon tax as “a tax would raise the price of fossil fuels and make alternatives, which today often are more costly to produce, more competitive in the consumer marke”

Politically another tax would be tough to implement considering that it can have a direct effect in the price of some good and services, however, there is merit in exploring the implementation of a carbon tax.


3 thoughts on “Carbon Tax vs Carbon Trading

  1. Hello i have entered the Virgin Earth challenge,with this so basic design,I have had phone calls from USA and New Zealand they are awaiting production,this design is so easy to explain,I started searching since october then earth challenge started,my device is universal in any size, depending on requirements of this Free energy wheel,no friction and gravity fed using magnets.I all so have contacted CSIRO and Ausindustry well before this earth challenge.My patent is only for security so no shelving of this design can happen.I sent this design in short discriptions i do hope my interpritations are understood

  2. I sent a request for the Participation Agreement on 11-2-2007 and many reminders by land post . It is now 11-3-2007 and there is no response . Details as under –

    Please forward to the appropriate department —-

    Dear Sir ,

    I have sent the Entry Form to the Virgin Earth Challenge , by land post , on 11th Feb 2007 , alongwith a duplicate copy a few days later . I have not received the Participation Agreement Form as yet . Please help in the matter .

    Secondly now I am simply receiving automated replies from you but no positive intervention and help . Please do something to help me .

    Thanks .

    Vikrant Suri

    To , Dated
    The Manager Incharge ,
    Virgin Earth Challenge ,
    120 , Campden Hill Road ,
    London , W8 7AR
    United Kingdom

    Subject – Submission of ‘Entry Form’ to receive a ‘Participation Agreement’

    Reference – Virgin Earth Challenge –

    Dear Sir ,

    As I understand – entrants are to first submit an Entry Form ( enclosed with this letter ) – cl 4.3

    They will then receive a Participation Agreement – cl 4.3

    Entrant signs and returns the Participation Agreement – cl 5.1
    ( not clear if Virgin further accepts or rejects the Participation Agreement , thus permitting or not permitting the entrant to enter the challenge .)

    This registers an entrant .

    Entrant then submits his entry .
    ( not clear if an entry may be sent alongwith the Participation Agreement itself )

    Anyhow – I have enclosed the filled up Entry Form , you may please send me the Participation Agreement at your earliest convenience .

    Thanking you ,

    Yours faithfully ,

    Vikrant Suri
    c/o Tender Heart School ,
    opp. H.No.670 , Sector 33-B ,
    Chandigarh – INDIA – 160020

  3. Pingback: World is Green : Business Strategy and Sustainability Climate Profits «

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