California’s Carbon Cap and Trade
In: Economics
Our atmosphere has become a dumping ground for CO2, and most companies don’t have to pay to pollute our atmosphere. They have to pay to get rid of garbage and hazardous chemicals, but not to pollute the air. All they have to do is pollute below the limits the EPA or state sets. There is little incentive to lower their pollution beyond that.
A carbon tax is just a flat tax on how much CO2 companies emit. “Cap and trade” takes this a step further and sets a limit on how much CO2 each company can emit, and in order to emit more, they can raise their limit by buying portions of the limits from other companies.
This allows cleaner industries to make money by staying clean, as their CO2 emissions will be low enough that they can sell their excess “CO2 Limit” to dirtier companies. This of course also means that dirtier industries will spend more money increasing their limits.
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