Environmental Policy Essay

Last month in the newborn York Times, Kate Galbraith noted that the campaigns of both(prenominal) Barack Obama and privy McCain presented widely differing views on climate change and energy policy, particularly with regards to strong-armer and clientele schemes, market-based policy instruments intended to maneuver industrial sectors into reducing their nursery emissions. Cap and deal schemes have recently been gaining much currency in spite of appearance the discussions of environmental policy as a means to address the disallow impacts which industry has upon the greenhouse problem.Such corpses work by creating a pecuniary inducement for emission reduction by dint of the imposition of costs on emissions. By establishing a treetop which limits the total amount of emissions that can be made by a designated group of polluters and leaving them free to alternate permits to pollute with one another, it encourages these polluters to meet or fall below the toughie in a flexi ble market-based fashion, rather than forcing them to comply with stringent regulations that could needlessly compromise their business operations.Companies able to cut their emissions can further profits from selling their permits to those companies facing difficulty in reducing their own emissions. The incentive is that all the companies would choose to bring their emissions to cap levels and try to do so in the most cost-effective fashion. It encourages them to innovate the means to reduce emissions. early(a) governments have already taken action to introduce cap-and-trade schemes of their own Australia has the unexampled South Wales Greenhouse Gas Abatement avoidance the Climate shift Response (Emissions concern) Amendment Bill was recently enacted in New Zealand and the European parliament has its own system known as the European Union Emissions Trading Scheme. At present, no system similar to these exists in federal law, and representatives for both candidates Dan Esty for Barack Obama, Douglas Holtz-Eakin for John McCain maintained that this should be remedied as soon as possible.Where they disaccord is how such a system should be structured. According to Esty, Obama favors distribution of emissions permits through auction, as this would force polluting businesses to pay competitively during initial distribution. Speaking for McCain, Holtz-Eakin advocates pre-determined distribution, limiting transactions to the permit trading market itself. The design of a cap and trade system is not a trivial matter. A short design can wreck the efficacy of a cap and trade system as a policy instrument.If permits are distributed too generously, as Holtz-Eakin proposes, what could result is a situation in which industries have little incentive to expunge their business operations of greenhouse emissions, as they would effectively be operating in a trading market where permits are graduate(prenominal)-priced worthless. Also, cap and trade systems cannot sta nd alone as an emission-reducing policy instrument, as there is a potential for traders to game the market by by design holding out on purchasing permits until the last minute so as to reduce their value, making unreduced emissions affordable to even the flog emitter.Furthermore, cap and trade systems lack transparency and present opportunities for fraud. Worse unperturbed is that a poorly designed cap and trade system result not account for the geography of polluters, resulting in a NIMBY effect where taint becomes localized to create emissions ghettos. As such, it should be recommended that any cap and trade system be designed to account for environmental justice, be substance to transparency, and should distribute permits at a market price, perhaps even modify such a price at a level high enough to incentivize the development of techniques and technologies to reduce emissions.Furthermore, a cap and trade system must be complemented by other policy instruments such as poll ution zoning and carbon taxes. Works Cited Galbraith, Kate. Candidates Advisers Spar Over Cap-and-Trade. New York Times. 23 September 2008. Retrieved online November 9, 2008 from http//greeninc. blogs. nytimes. com/2008/09/23/candidates-advisers-spar-over-cap-and-trade/? scp=3&sq=cap%20trade&st=cse Parker, David. Historic climate change legislation passes. New Zealand Government. 10 September 2008. Retrieved online November 9, 2008 from http//www.beehive. govt. nz/release/ historical+climate+change+legislation+passes Greenhouse Gas decrease Scheme 2008, Introduction to the greenhouse gas reduction scheme, Greenhouse Gas Reduction Scheme. Retrieved online November 9, 2008 from http//greenhousegas. nsw. gov. au/documents/Intro-GGAS. pdf Pearce, Fred. European trading in carbon-emission permits begins. New Scientist. 6 January 2005. Retrieved online November 9, 2008 from http//environment. newscientist. com/ furrow/earth/dn6846-european-trading-in-carbonemission-permits-begins. htm l