Reducing carbon emissions - Market or Regulative approach?

Teachers and Students > Debates

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Freaked12:

--- Quote from: $tyli$h Executive on June 18, 2010, 05:15:23 pm ---I wouldn't agree that the market approach will cause any significant unemployment. Carbon trading between businesses allows the greatest reduction in emissions at the least cost – this damages the world economy less and will ultimately allow more rapid decreases in emissions than costly regulations like banning gas guzzlers would achieve. Power generating plants and motor vehicles in the developing world are often hugely more polluting than those in the most developed nations, and it would be relatively cheap to equip them with more modern technology in order to bring emissions down. By contrast, achieving even a tiny additional reduction in more efficient developed world plants and vehicles would be hugely costly, as it would require completely new technologies to be developed (come on, they're already advanced). Carbon trading (or an international carbon tax) would encourage firms to direct investment into whatever would reduce their emissions most cost-effectively, either by direct investment in their developing world operations, or by buying carbon credits (or quotas) from such countries. If this means emissions in the rich world stay level while carbon reduction efforts are concentrated elsewhere, then fine – the world as a whole gains from this. And if it transfers money and directs investment into developing nations, then that is an additional benefit as the developing countries get a chance too!

The regulations damage businesses the most. It is a blunt mechanism and provides no incentives for trading or improvement. Besides, carbon trading of quotas could develop a whole new financial market just like the stock market or commodity markets! And may allow small traders and investors to take part too!

--- End quote ---
. Power generating plants and motor vehicles in the developing world are often hugely more polluting than those in the most developed nations, and it would be relatively cheap to equip them with more modern technology in order to bring emissions down.

Cheap ? How? New technologies are always so expensive and are usually produced in Developed countries which means developing countries will have to import these technologies.It's another matter if Developed countries donate these technologies but what if they dont? Developing countries are much interested or forced to buy food products or primary needs like oil or gas to keep their ,whatever industry they have, running.Will they have enough money left to buy the new environmentally friendly products.?

Carbon trading (or an international carbon tax) would encourage firms to direct investment into whatever would reduce their emissions most cost-effectively, either by direct investment in their developing world operations, or by buying carbon credits (or quotas) from such countries.
Carbon tax..and who will agree on it.?
Have You seen Chinese,Russian politicans or even Saudi Politicans.They will veto any such decision.International carbon tax requires unity among countries which doesnt exist

$tyli$h Executive:

--- Quote ---Cheap ? How? New technologies are always so expensive and are usually produced in Developed countries which means developing countries will have to import these technologies.It's another matter if Developed countries donate these technologies but what if they dont? Developing countries are much interested or forced to buy food products or primary needs like oil or gas to keep their ,whatever industry they have, running.Will they have enough money left to buy the new environmentally friendly products.?
--- End quote ---

Take it like this - In Bangladesh, we don't have any electric cars. Like this, the developing countries are much backward in case of inventing technologies for reducing carbon emissions. Whereas the developed countries have already started to produce environmentally friendly electric cars. It would be relatively cheaper to equip the developing countries because the margin of the level of technological advancement is high. The developed countries are much more technically advanced than the developing economies. And at this stage, the price of electric cars have definitely gone down due to some economies of scale. The developing countries does not have to spend a buck for R&D required to develop new technology to cut carbon emissions. They just have to buy them. As they don't have to spend the huge expenditure on R&D, it is cheaper for them. Car manufacturers like BMW has factories in developing countries like SA. So, not necessarily will a developing country always have to buy the environmentally friendly cars from a developed country and cause a strain on its BOP.

--- Quote ---Carbon tax..and who will agree on it.?
Have You seen Chinese,Russian politicans or even Saudi Politicans.They will veto any such decision.International carbon tax requires unity among countries which doesnt exist
--- End quote ---

Ah, they'll grow more sensible with time. The Kyoto protocol was agreed upon. Eventually, as they see some low lying areas being drowned due to greenhouse effect, they'll come to their senses.

Freaked12:
Okay Now you come to the environmentally friendly cars

Someone sent me this link one day.I suggest You look at it and calculate the opportunity cost
http://www.environment-green.com/Green_Cars.html

$tyli$h Executive:
Yes. There will always be an opportunity cost. It will be more than using polluting petrol and diesel for cars.

But this is mainly due to that scientists are not yet able to develop a model of electric car, which can be produced with substantial economies of manufacture to lower their price. And if this is the case, imagine a case where governments force the citizens to use expensive electric cars by regulation. This is the case where it causes chaos and unemployment...

The market approach does not tell that you are forced to buy an electric car or petrol car or diesel car or whatever. It just says that, there is a price which you must pay for the amount of emission your fuel causes. For example, diesel cars are most polluting. They receive the highest taxes so that people are discouraged to buy diesel cars most. Whereas, hybrid cars and electric cars will receive no or little taxes so that people are encouraged to buy them more than the polluting ones. The margin cannot be accurate, but still, those citizens who are concerned for the environment will be able to pay a higher price for their hybrid or electric cars.

An additional benefit is that the money raised by the government from taxes on polluting cars can be used to plant trees, which reduce CO2 in the atmosphere (to recompense the CO2 released by the most polluting cars). Eventually, if the government is keen, the level of CO2 will reach an equilibrium. This is a very crucial benefit of the market approach, which is unthinkable in the regulative approach, where the government receives no revenue, causes substantial economic downturn and discourages R&D.

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