Question

The concept of a CO2 tax is viewed critically by some experts and politicians. These experts and politicians advocate instead an expansion of emissions trading.

Discuss the advantages and disadvantages of both instruments.

Write about 200 words

Answer 1

Advantages :

Carbon dioxide taxes are way to internalide social cost of consumption by consumers or producers. Provides organisations to become more environmental friendly and adapt greener norms with environmental auditing practices. It helps maintain ecological balance and preserve biodiversity and climatic changes. Enhances usage of more renewable sources of energy which ultimately lowers cost of production in long run.

Disadvantages :

There is difficulty in measurement of carbon level production hence taxation is difficult Difficult to assess true cost of carbon emissions on environment anr its associated damages caused. It causes potential tax evasion by firms and corporate frauds leading to environmental dmaage and negative externality.

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