Reading log
Choosing Reduction Goals Compatible with Global Climate Stabilization is an article by Bryan Mignone and it can be analyzed in two portions. First, it establishes the main environmental challenges facing the global community. Second, it provides an analysis on how to conserve the environment from the increasing threats. Climate degradation stands out as one of the pertinent universal environmental threats and its coverage is broad as the atmospheric changes spread past individual territories to the international spheres.
For instance, the effects of carbon emissions spread beyond the territories of origin. The article reveals that the individual nations benefit by meeting their objectives in production, but the effects of the emissions are shared in the global arena. The individual nations may remain reluctant to enforce the available incentives to contain the pollutants, but decide to joyride on the efforts of others. Such issues require international policy formulation, which is yet to be agreed upon and the assumption that it will soon be implemented is the only hope that people can cling to as they anticipate a future with clean atmosphere.
The author observes that most political forums have expressed concerns over the reported deviation of the global average surface temperature from its levels before the industrialization age. The author notes that during the G-8 convention in June 2009, leaders agreed to contain temperature rise to 2 degrees Celsius in the long term. The author notes that this approach has been an effective scientific approach, since temperatures rising beyond 2 degrees Celsius would disintegrate polar ice sheets. This approach can be used to attain greenhouse gas concentration and reduce global emissions. The cap–and–trade policy (a system of tradable emissions allowance) should take a form that is flexible incase the applied technology fails to deliver the expected results.
The UN Framework Convention on Climate Change suggests that the agenda on global climate policy can be successful at curbing anthropogenic climate interference by establishing the greenhouse-gas concentration target. The disintegration of the polar ice sheets can result in a rise in sea levels. Although the disintegration may not occur in the short run, in case the emissions are not controlled, and thus left to accumulate unabated, the consequences might be long term. In case partial glaciations of the Greenland ice sheet as well as the West Anti-arctic ice occur over a long period with the estimated temperature rise of 1-4 degrees Celsius, it will raise the global sea level by 7meters. Living along the coastal areas will be dangerous. In addition, with the greenhouse effect contribution towards bringing temperature moderations, the technology with time might be outweighed by the increased emissions of CO2
Understanding the carbon cycle helps in the creation of a sustainable global policy. This goal is achieved by identifying a global emission-reduction criterion after understanding a specific concentration target. The absorption of the anthropogenic carbon dioxide by the ocean is actually small due to an imbalance in the ocean mix. This aspect limits the atmospheric exchange as more CO2 is added to the atmosphere than it is absorbed by the ocean. A balance in the atmospheric exchange cannot be attained. Assuming that CO2emissions drop to zero by 2050, the concentration drops very slightly to 425ppm meaning only 50% drop towards the balance can be achieved.
Focus is now geared towards involving the US, the European Union, China, and India by taking responsibility of their 60% emissions of CO2.This move intends to get to the 50% global reduction. In a bid to achieve this target, model-based analyses suggest that the use of alternative and renewable power could ease the situation. The review concludes by insisting that environmental conservation will be achieved if policies are actualized by the states and the willingness to cooperate in the long term. This article provides important guidelines to the US policy makers targeting on reduction of gas emissions.
It is a resourceful article with a well-analyzed approach on how to deal with greenhouse gas emissions using the cap-and-trade system. It is a simple model, which can be used not only by the US climate policy makers, but also by other countries to deal with reduction of gas emissions. I think this article carefully evaluates the importance of international agreement on policies to reduce greenhouse gas emissions since the US alone cannot solve the problem to a noticeable extend. The article challenges the global climate policymakers to act now and save the reckoning environmental disaster.
The second article in this reading log is Equity and Efficiency in cap-and-trade by Adele Morris. The author reviews how to manage the emissions allowance supply by introducing the cap-and –trade system to govern the rate of emissions. For instance, the author specifies that the law, under the American Clean Energy and Security Act, gives a limited and decreasing rate of emissions each year. The entities covered in this act contribute allowances to cover their emissions. The author focuses on the effects of climate policy on individuals with respect to these firms. The owners of the firms as well as other individuals experience the benefits and burdens of these policies.
However, the costs of buying allowances by the firms are transferred through the chain of supply to the consumers due to hiked prices. After the yearly caps decline, the prices escalate to compensate for the probability that emissions might increase. However, the author talks of a situation when shareholders and workers are affected by the climate policies even when costs are passed to consumers. For instance, when the cost of production is high, they will sell at high prices and this aspect will result in few sales, which means less revenue to cover the costs. These effects are only experienced in the short run and no losses are expected.
The article explores policies that define the sharing of costs amongst the affected groups. If a policy favors the high-income households, it creates a burden to the low-income earners at the same time. According to the author, the economy terms the policy as regressive. The article identifies that the low-income households depend highly on energy and other goods whose prices are expected to rise. This observation implies that the price on carbon is regressive, thus making it difficult for the poor households to afford energy.
The poor will also be forced to spend extra on increased prices of energy and other goods, since they cannot afford alternative technology. The author looks at the possibilities of compensating the poor through the cap-and-trade system. The regularities set by the American Clean Energy and Security Act reduces the burden by increasing the purchasing power of the poor households. Wealthy people spend highly on energy, which means the compensation on the poor is not viable, since the rich cancel out the achievements via their escalated spending.
The markets inevitably experience diminishing allowances every other year. This aspect implies that high prices of the allowances will vary every year. The government receives revenue from the sale of allowances. Consumers will bear the expenses to buy these allowances and as the revenue collected circulates back to the economy, the firms will benefit. In addition, the firms will benefit twice as they will reap from the allowances and still cash on the towering selling prices. However, a quandary arises, as whichever approach is adopted, the results are almost the same. For instance, whether given freely or sold at prohibitive prices, the cost of the program does not change significantly. This assertion means that the prices of energy and other commodities will not be affected by the different ways of managing allowances.
The author discusses how the purchasing power is subject to the high prices. The tax interaction effect involves additional distortions since the income is already taxed. The burden on income tax creates reluctance to work, thus reducing the supply of labor in the economy. In addition, taxes imposed on capital income create the disincentive to invest, thus reducing consumption.
Consumers will continue to bear the costs unless the cap system goes an extra mile to establish the most appropriate models. Allowances should be distributed in a way that enforces the incentives to reduce emissions. For example, subsidizing energy costs will lead to high consumption and this aspect will require great abatement measures across costly sectors to attain the emissions cap. The author addresses some issues, which are favorable to reduce the burden for consumers. The government should use part of the allowance income to reduce payroll taxes, withdraw taxable earned income for the poor, or develop the platforms that benefit the less fortunate.
The article does not clearly state whether the allowances are creating incentives to reduce emissions by firms. Instead, it shows that the cap system is lacking. At the same time, the author argues that the cap model should be improved to cut on the consumers’ spending. I think these contradicting remarks make the paper hard to determine the direction of its guidance. Even though it has good information for policy makers, the author did not make a firm stand on the possible way out to cut on the high expenditure transferred to the consumers. I think the author is right by stating that the cap system is lacking, but alternative measures are not proposed, thus confusing readers on how to use or adopt the information. The author should have included alternative ways of dealing with the situation.
The third article is by Dale Jorgenson, Daniel Slesnick, and Peter Wilcoxen on Carbon Taxes and Economic Welfare. The authors begin by stating that the carbon tax is levied on the burning of fossil fuels in proportion to the quantity of carbon dioxide emitted. This approach restricts firms and households to limited use of fossil fuels coupled with seeking alternative energy with less emission of the carbon dioxide gas.
The accumulation of carbon dioxide in the atmosphere poses serious environmental hazards such as global warming. International concerns have been expressed by most countries with the US leading the campaign to regulate carbon emissions. Even though the emission might involve few industrialized states, the effects spread across states, thus posing global climatic threats. This article analyzes the distributional impact of carbon levies that would anchor the US carbon emissions to the 1990s levels.
This goal is attained by breaking the carbon taxes to capture the individual households. This move will mean that the relative prices will vary depending on the consumers’ purchasing power. In a bid to cover these disparities, the distribution model should factor in the aspect of equality. Those who consume more energy will have to pay extra to cater for the carbon tax costs. The authors identify differences in economic effects across regions in the US.
The authors develop a model to estimate the carbon dioxide emissions. This model assesses the carbon tax effects to the welfare of consumers by focusing on the following questions. The authors seek to determine if tax affects the welfare of different kinds of households coupled with how these individual effects can be summed to provide a compiled measure of the effect of the tax and determine whether the tax is progressive or regressive. The models help in understanding how tax reenters the economy. The model figures out that the distribution of the taxes is substantial. The models show that the tax is regressive, since the direct effect is a rise in prices of energy.
The rise in price for fossil fuels leads to the use of alternative energy and no energy products by firms and households. The article suggests that the imposition of carbon restrictions will have effects in the end by influencing capital formations. In conclusion, the authors discuss the viability of their models by discussing long-term projections of the US economy; however, in the models, they fail to take into account the presence of human labor or capital in the industry.
Probably, the price to develop technology to surface the increase brought about by carbon tax will be high and this change will cause substantial effects on the US economy. After analyzing this article, it becomes clear that since the problem of emissions is a global affair, then solutions should be viewed at this level. By regulating energy, prices at the global stage will reduce significantly the use of coal and carbon emissions will go down at the same time improving economic efficiency.
This article is well articulated as it relates the importance of carbon tax to reduction of carbon emissions in an understandable way. The authors have engaged the reader in a broader way by analyzing how carbon tax can be enforced to enable a decrease in carbon emissions. The authors have suggested an alternative to burning carbon emitting products by embracing new technology at global level. Therefore, I think that the paper is interesting as well as innovative and it gives good proposals to help in reducing carbon dioxide emissions.
The fourth reading viz. Carbon Taxes versus Cap and Trade: A Critical review is by Lawrence Goulder and Andrew Schein. The authors evaluate how carbon tax and a pure cap and trade system compare. They go further to establish how the two relate beyond the normal dimensions previously researched by identifying that exogenous emissions pricing has several attractions over pure cap and trade. Exogenous pricing eliminates problematic interactions with other climatic policies as well as preventing potential wealth transfers to oil exporting countries.
Exogenous pricing also avoids price volatility and minimizes possible policy errors in unpredictable situations. The US Environmental Protection Agency and the clean air act have actively been involved in policy implementation to reduce greenhouse gas emissions. Most states, which are responsible for the emissions, are being regulated by the emissions pricing that includes carbon taxes and cap and trade. The debate arises on what form of the policies is suitable for climate policy. Disagreements on whether to adopt carbon tax or cap on trade prevent the introduction of one of the forms to regulate emissions in the US. The authors identify that the carbon tax is gaining ground and as a source of new revenue to help cut on budget deficits.
The article singles out carbon tax as the best approach to attaining a good distribution of the tax costs between firms and consumers. In addition, it bars free riding by polluting nations, thus encouraging competition. However, if properly examined, the two approaches can produce similar results along each of the mentioned scenarios. The authors look at scenario when an individual nation implements climate policy at its own firms. This aspect becomes difficult for firms to compete at the global market with other states were climate policies are not imposed. This scenario requires collective policing by the international community to avoid burdening some states.
Several issues are addressed to expound the relational attractions between carbon tax and cap and trade system. The authors address the issues of volatility of emissions’ price by arguing that they do not affect the carbon tax since it involves gradual changes. In the cap and trade, price volatility arises due to the shifts in demand that prices are expected to change. In a bid to avoid price volatility, cap and trade system can bring in allowance price floor or allowance price ceiling. Other issues involve addressing uncertainty about emission prices.
The authors also factor in the idea of perceptions and political considerations. Political perceptions are altered occasionally. For instance, in the US, cap and trade was gaining momentum in steering climate change policies. The Waxman-Markey bill proposed the cap and trade and it attracted majority votes in the US House of Representatives. The cap was perceived to be free of tax, and thus supporting it was politically good. However, with time, politicians recognized that cap and trade works like a tax.
Therefore, with this knowledge, politicians disengaged from the cap and trade system. In conclusion, the article figures out that the three models, cap and trade, carbon tax, and the hybrid are all relevant to creating incentives for emissions. However, it is important to note that debates will continue, but good climate policy incorporating global support will be the most definite approach to emissions abatement.
The article provides good analyses in comparing the cap-and-trade model with carbon tax. The article compares the two models by indicating at what circumstances each is most applicable, but the authors do not figure out which model is stronger or most effective for the international community. In guiding the reader as well as the policy makers, the authors propose a combination of the two or use of the model, which best suits the current situation.
I think this aspect is open and naïve guidance since governments will be open to adopt the model that favors their interests and expose consumers to high costs. In addition, I think it is not easy for non-economists to understand the article, which limits its informative content to a few readers. Therefore, while the paper might be of great significance to economists and thus useful in policymaking, it cannot be used as a learning aid for most learners cannot understand the models employed.
The last article describes what a Carbon tax is. The need to impose a carbon tax rises due to the threats that carbon dioxide poses to the atmosphere. The main objective is to revisit the effects of burning fossils fuels and identify how to reverse the arising implications. However, the big question arises on how much the carbon tax policies can cover given that there are so many substances that emit carbon. These substances are referred to as pollutants.
Since carbon dioxide is the highest greenhouse gas entering the atmosphere and the main pollutant causing global heating, the need to control the situation arises. The carbon tax ensures that whoever is responsible for burning carbon-dioxide releasing substances pays at the set rate, which is commensurate with the release. The idea is based on creating an incentive to safeguard the environment. In a bid to achieve levying, several models can be adopted. The author suggests tax shifting, which is simply cutting or reducing tax burden on specific items such as income and capital gains and transferring the burden to fossil fuel-related commodities.
This move will raise the prices of the products and consumers will respond by cutting on spending for such goods and take substitutes. The firms produce less due to a decrease in demand, and this move will involve less burning, hence reducing carbon dioxide emissions. However, the carbon tax goes to the governments, which are mandated to invest in green initiatives that reverse the threats of pollution on the environment. Carbon tax at a large extent solves the issue of pollution, but the model misses on some areas were pollution policies do not cover. However, the model does not consider some industries that rely on fuel such as transport.
This industry should be cushioned by paying special tariffs. However, the author argues that such a move will create a disincentive. The overall decision should thus focus on the policies that favor the global climate. Carbon tax stands out as the best model to reverse global warming among other climatic degrading factors. I think this article is easy to read and understand. It is short, but rich in relevant information to all stakeholders dealing with environmental conservation. The author explains how carbon tax can help to create a significant decline in greenhouse gas emissions.
The information and the guidelines that the author suggests are favorable and easy to implement if accorded global concern. The article does not compromise on defectors and it shows a firm stand and efforts to address the issue of environmental degradation. Therefore, in my opinion, this article is highly educative and it should be incorporated in the decision-making process within policymaking circles on top of being used as a teaching aid in different learning institutions.