CAP AND TRADE VS CARBON TAX 2015

Emissions Certainty CAP AND TRADE Sets firm limits on emissions Individual flexibility in achieving targets CARBON TAX Does set specific emissions targets Emissions would vary year to year on markets If prices high then willingness to pay more taxes would decrease amount companies would be willing to pollute

Price Predictability CAP AND TRADE Prices for permits would fluctuate and therefore companies would not necessary know the price in order to plan costs CARBON TAX Permanent incentive to reduce emissions Known quantity for businesses in order to plan Can plan for investments in alternative fuels that have a high up-front cost

Ease of Use and Fairness CAP AND TRADE Substantially raise prices on goods and services Low-income could be adversely affected Would need to rebate part of profits back to consumers: industry would do this Huge administrative structure would be need to regulate and monitor CARBON TAX It is transparent and easily understood Would raise substantial revenue that the government could rebate

Impact on Consumers CAP AND TRADE Low-income individuals hit hard Rebates harder to account and return CARBON TAX More understandable Government controls revenues: more accountable

Environmental Effectiveness CAP AND TRADE Effectiveness depends on the following factors: Will reductions be deep enough to have impact Will the cap be nation-wide or industry-wide Will any revenues be generated CARBON TAX Major question is whether the tax is set high enough to create market incentives to move to climate-natural technologies

Most politically realistic CAP AND TRADE Complex system that general public could not fully understand: groups can manipulate for their own purposes Public is skeptical of large government agencies Has a track record in Europe and N.E. United States CARBON TAX First and foremost the public is adverse to new taxes Easier to educated the public