Reducing carbon emissions - Market or Regulative approach?

[$tyli$h Executive]

We all know that scientists have identified the ever increasing amounts of carbon emissions for the global climate change. And this can, on the long term, drown the low lying areas of the earth if the glaciers of the poles melt due to the greenhouse effect.

So, there is a need to control carbon emisssions. The debate is about whether it should be done in a 'market' approach or direct regulative approach by the government?

Market approach to reduce CO2 emissions involves imposing prices over carbon emissions. For example, by putting high taxes on vehicles, and by making it mandatory for businesses and other private users to obtain permits for polluting the environment up to a certain level (like the road pricing technique of Singapore). The businesses who make less emissions than the quota can sell the permit to other businesses, but the total amount will be limited.

Regulation might ban certain polluting practices, such as coal-fired power stations, and force businesses and consumers to adopt cleaner technologies like hydrogen powered cars.

Which approach should be used and why?

[$tyli$h Executive]

I think the market approach is much more suitable.

Market mechanisms to control CO2 emissions are open ended and provide and an ongoing profit motive for companies, state agencies, and individuals to reduce emissions, as doing so either creates additional profits (trading emission quotas) or yields up additional tax reductions (carbon tax). This is better than a regulatory approach, according to my opinion, which only requires cuts to a certain level and provides no longer-term incentive for companies to drive down emissions by investing in new technology – meaning companies will take the minimum action necessary to meet the regulatory standard. Due to less R&D, we will see no new innovations of technology for making less carbon emissions.

[Freaked12]

Both will increase unemployment in the short run and unfortunately in democracy party will look to improve short term objectives to boost their election chances the following term.
If You put market approach then we need to look at how transparent the Government is.You belong to Bengladesh you would know that rich folks or big multinationals could easily not pay the taxes by bribing the government.Thank the Lord above countries like Pakistan or India are not high producers of Co2.
it should be of concern though that China another country where corruption is high has attained the second position in top 10 Carbon producers.
United States is already doing this approach and as far i have heard it is already in place in Chicago (correct me if i am wrong) and results are not satisfactory.There should another policy that not only shows positive results in America for example but also tackles countries like Pakistan or China where there is alot of corruption
Second is way tooo RADICAL.I mean for countries like China or India where millions of workers are employed in coal producing factories,banning these firms might result in Civil War.

I suggest Going for Nuclear Power.Lasts for 30 years although has a high initial cost but is cheaper in the long run

[Freaked12]

Also not to mention
that countries like Saudi Arabia or UAE or Qatar Or Russia Or Miami state of USA where there are alot of billionaires ,they could easily pay the taxes and continue to pollute the environment.
For example Looking to reduce water consumption in Saudi arabia, the government suggested increasing the rate of tax of water consumed per second.
This was easily put to dust bin when the chief economist Sfiankis told them that the group which consumes alot of water aka rich folks  which consume about 51 percent of total water in Saudi Arabia could easily pay the new amount thus rendering it useless in the first place

[$tyli$h Executive]

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!

[Freaked12]

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!

wait i will get back to you.
i was talking about regulative approach causing serious unemployment

[Freaked12]

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!

. 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]

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.?

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.

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

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.

[$tyli$h Executive]

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

Well, a carbon tax and "cap and trade" system is much more favourable than the regulative approach. If the government straightly bans polluting cars and production methods, this is going to be much hard for businesses and consumers to come up to terms with. They will face a substantial downturn in their standard of living due to the economic downturn which will follow. Regulation is a blunt instrument, lets face it. People will hate the government for this and thus the government loses votes due to regulation system.

But in a cap and trade and tax system, individuals will still be able to use polluting vehicles and production methods, but will have to pay the relative tax, proportional to the amount of carbon emission caused. They are not forced in any way by the government, just the tax. The people will see this better than the "regulation approach" in which a decision is forced upon them. The government is thus not likely to lose a substantial amount of votes if it is able to, using the right tactics, induce awareness on its citizens of the harmful effects of CO2 pollution.

So, world leaders are more likely to agree on a market approach than a regulative approach.

[Saladin]

Quite frankly, you need stats to back up your arguments.

ANY lasting decision will have a dire effect on the economy in the medium term.

Businesses have to suffer, because the rate at which we need changes is far to great.

Emissions of carbon will NOT decrease will the limits, and the increase increase in taxes.

The ultimate fact remains this: if we want to change energy policy, we are going to have to do a radical rethink of energy itself.

The honest answer to your question is this: we need to invest HEAVILY in green technology, because it is the only thing that has a lasting impact.

[astarmathsandphysics]

Market is better. If you charge people who pollute, you can use the monewy to reduce pollution. If you ban pollution, lots of people will end up in jail, where they will cost us all money

[$tyli$h Executive]

The Singapore introduced car taxes. Everybody needs to pay taxes, which are often more than the price of the cars they are going to buy. To enter busy areas like Hougang, you've got to pay a flat rate of tax in the peak hour, falling in off peak hours. I've been there and I think this is a very effective system if the country's road network is proper. I don't think this high rate of tax has caused Singapore to suffer any economic decline. In contrast, it has experienced rapid rates of growth. So, this statistic reinforces that a market based approach does not cause the economy to suffer in any way.

Yes. I agree that we need to invest heavily in green technology. And the market based approach does (indirectly) just that as I explained earlier. The regulative approach makes some attempt, but generally fails for reasons explained above.

[Saladin]

The Singapore introduced car taxes. Everybody needs to pay taxes, which are often more than the price of the cars they are going to buy. To enter busy areas like Hougang, you've got to pay a flat rate of tax in the peak hour, falling in off peak hours. I've been there and I think this is a very effective system if the country's road network is proper. I don't think this high rate of tax has caused Singapore to suffer any economic decline. In contrast, it has experienced rapid rates of growth. So, this statistic reinforces that a market based approach does not cause the economy to suffer in any way.

Yes. I agree that we need to invest heavily in green technology. And the market based approach does (indirectly) just that as I explained earlier. The regulative approach makes some attempt, but generally fails for reasons explained above.

Actually the market based solution consumes both time and mony, now time is sth that we dnt have, at all.

We need a mass greenification, and we need it soon, before low lying countries like Bangladesh simply drown.