- 60% in US support carbon taxes, 80% Indians support carbon taxes

(provided these were on a global scale and the revenues were returned
to the people or spent on climate projects.)

Reviews from stakeholders

- Carbon pricing remains unpopular to consumers and businesses
- Raises production costs for businesses
- Unfair when they trade with states that dont have c.taxes
- 2014 tax repealed in Australia because it was destroying jobs
- raises prices for consumers
- raises household energy prices (very bad for the poor)

C. taxes vs. cap and trade scheme

- Carbon taxes and permits give firms incentives to switch to
less polluting forms of energy.
- C. tax fixes the price of carbon emmisions and allows
the quantity of c. emmited to vary, depending how firms
answer to the tax
- Cap and trade schemes fix the quantity of permissible pollutant,
allows price to vary depending on supply and demand

- Fuel prices in global markets fluctuate according on supply and demand.

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1. Compare and contrast some key issues

surrounding the debate on carbon taxes versus cap and trade schemes.

Carbon taxes

PROs
- Make energy prices more predictable
A predictable price is important for businesses that have to plan
for the future and depict a solid report on future production costs.
- Easier to design and implement
- Can be applied to all users of fossil fuels
- Do not permit to be manipulated by governments and interested groups
Tradeable permits can be manipulated by politicians and distributed to
certain groups for the benefit of supporters
- Does not require much enforcement
Firms only need to pay taxes on type and quantity and type of
fossil fuel used

CONs
- Sometimes set too low due to political preassure
Governments unwilling to set high taxes
- Unpredictable effect on reducing emmisions
Since c. taxes do not fix the cap on amount of permissable emissions,
then effect on the environment depends on how firms react to the tax.
- Goes against the principle of equity
C. tax is a regressive tax and takes a bigger percentange of income
from low-income earners than high-income earners. Also, consumers are
affected, just like producers.
Cap and trade schemes

CON
- Difficult to design and implement
Hard to figure out the right price cap and how to distribute
permits among users
- Often target one (set of) industry
- Requires a lot of enforcement
Requires monitoring emissions, firms may emitt more than permited
- Sometimes cap set too high due to political preassure
Has little or no impact on reducing emmisions.

2. The World Bank regularly updates the following

site with information on carbon pricing (carbon taxes or
tradeable permits) that countries around the world are
either implementing or planning to implement.
Select one or more countries of your choice and
investigate the carbon pricing that has been selected.
Research the experience of your country or countries with respect to

a) Political acceptability

b) Effectiveness with respect to reducing carbon emissions

c) Any further plans for tackling the carbon emissions problem.