Question

Suppose you are asked to put a price on carbon emissions. Explain why you prefer a global carbon tax or a global cap-and-trade system.

Answer 1

The carbon tax is levied directly on the Greenhouse gas emissions or the carbon content fossil fuels. The major purpose of the carbon tax is to reduce the carbon emissions of the countries. Also, the carbon tax helps to create alternative energy at a cheaper cost. It also increased the tax-shift from or the tax shift away from the federal income tax or sales tax.

In the same way, the cap and trade system given a cap that industries can release carbon emission to the environment. Any industry cannot reach this cap limit as by law. The benefits of cap and trade in the sense that companies would reduce their cost of emissions because of the low cost and they can sell more product and achieve higher profits. It also encourages to supplement the taxpayer resources and find alternative energy solutions.