Cap and Trade-Golbal warming

Student`s Name:Tutor`s Name:Subject:Date:
Cap and Trade Program
Minimizing the risk that is posed by climate; this is the notion that is being quietly but vigorously spread around the globe. The main aim is to reduce the carbon dioxide emission to the target set in the Kyoto Protocol (Commission of the European Communities, 2000). To achieve this goal, the administration is toying around with the idea of introducing cap and trade as a more friendly market-based mechanism. While reducing the carbon dioxide emission is a positive move in ensuring environmental safety and preservation, does it really warrant the introduction of ‘cap and trade`? Furthermore, there are great uncertainties concerning the climate. Accordingly it can be argued that the relevant authorities are acting too soon. This paper will look into the weaknesses of the ‘cap and trade` and conclude that it is not a solution to reducing global warming. Under the ‘cap and trade` system, the government comes up with a limit of emissions (cap). Quotas are then imposed -based on the caps- on emission sources like factories. Allowances are allocated to the facilities by the government. This will represent the quota volume. Reduction of emissions must be met by the facilities in correspondence to their set quota. Additionally facilities could purchase allowances from companies that have exceeded their set required reductions (trade). This system was adopted by Europe and the consequences were from sterling. It was viewed as a bureaucratic morass that was accompanied with vast side effects (negative for that matter) (Mufson, 2007). Even more surprising was the fact that the plan had very little effect on carbon emissions. When introducing taxes to a population marred by economic depression and massive inflation like the present society, rebranding of the tax language can work magic. Essentially, ‘cap and trade` means the same thing as ‘carbon taxes` or ‘carbon dioxide rationing`. The basis of this tax is the scarcity that has been created by the government fiat (CO2 emissions cap). The government quotas additionally ration the remaining supply. The tax proposed is the cost of compliance when the carbon based fuels are used. What is detrimental especially to those paying the ‘carbon tax` -as i think they should be called- is the fact that no one has the full knowledge about the exact amount of carbon emissions that that would result to a significant change in the global temperatures. Therefore, according to me the existence of the precise cap to regulate and address climate change effectively is lacking. However much noise the politicians or the media advertise the effects of global warming, they all do not know the exact facts that surround global warming (Christopher, 2009). This lack of understanding of the underlying issues then makes the ‘cap` not to be considered as a marketing mechanism but rather a political mechanism. The ‘cap and trade` program is very costly and extravagant in whatever way a person looks at it. A high cap would waste resources reduction in emissions would be bigger than the benefit and in the long run the existence of benefits would be oblivious (It should be noted that a higher cap requires a smaller emission reduction). On the other hand, a lower cap would definitely require sizeable emission reductions and therefore catapulting the cost. Eventually this would engineer economic hardship. This form of program definitely does favour the bigger firms than the smaller firms, and in business competition it would be unfair to the sma...