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Contents: Cap and Trade | Carbon Tax

Cap and Trade:
The basic premise of cap-and-trade is that government doesn't tell polluters how to clean up their act. Instead, it simply imposes a cap on emissions. Each company starts the year with a certain number of tons allowed--a so-called right to pollute. The company decides how to use its allowance; it might restrict output, or switch to a cleaner fuel, or buy a scrubber to cut emissions. If it doesn't use up its allowance, it might then sell what it no longer needs. Then again, it might have to buy extra allowances on the open market. Each year, the cap ratchets down, and the shrinking pool of allowances gets costlier. As in a game of musical chairs, polluters must scramble to match allowances to emissions. Read more: Presence-of-Mind-Blue-Sky-Thinking
Source: The Political History of Cap and Trade | EcoCenter: Energy | Smithsonian Magazine

Carbon Tax:
The claim is that a carbon tax would not only be simpler and more transparent, but have fewer special provisions, accommodations, or loopholes than a cap and trade system.
Why revenue-neutral carbon taxes are essential at carbonTax.org
Opposing Views: Carbon Tax isn't Best Solution for Global Warming
In his article for the NJ Sierran, The Upside Down World of Energy Policy: Supply-siders in the Driving Seat, Sunil Somalwar makes the point that instead of attacking the supply of energy with subsides for ineffective boutique renewables we should attack the demand side. "Large price hikes are needed to reduce emissions, but people will balk at them unless the money goes back into their pockets. The right solution is to tie the cap-and-trade with auctions (or almost equivalently, a carbon tax) to sending every collected penny from it back to the people in the form of direct refund (or income tax reduction). "
A Climate for Change: Global Warming Facts for Faith-Based Decisions
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last updated 7 Apr 2010