Pros and Cons of Cap and Trade


While it is argued whether global warming is happening or not, there is one thing that all of us agree is bad—pollution. Whether it is in the air or in the water, limiting pollution will guarantee a healthy planet that we leave to our children. Generally, this outlook has guided the US government to impose a number of regulations on pollution, including Cap and Trade. But like other policies associated with the environment, this pollution-reduction strategy has been frequently contested. Here are its pros and cons:

List of Pros of Cap and Trade

1. It promotes efficiency across companies.
Imposing tax through this policy would incentivizes creativity, leading companies to save money down the road and go green by investing in cleaner sources of energy. It requires them to reduce their carbon footprints, thus helping save the environment. In addition, it encourages these companies to invest in their own research and development to find safer and cleaner means of disposing harmful chemicals.

2. It limits the release of carbon into the atmosphere.
Cap and Trade controls the amount of pollutants released into the atmosphere by requiring companies to pay for the amount of pollution they cause, which will result to a better environment for everyone not just in the country, but also in other parts of the world. Such a system will also show the next generations that we are responsible and care for their future.

3. It serves as a source of government revenue.
This policy allows the government to give out pollution credits to companies that are owed to the latter, allowing it to generate profit. This is certainly a great financial aid for the local and state governments, considering the current deficits they are facing. In addition, this can help with advancing the research and development of future green technologies, such as solar panels and wind turbines.

List of Cons of Cap and Trade

1. It possibly passes costs on to the consumers.
One concern about the implementation of Cap and Trade is that the costs added to the industry would be passed on to the consumers. For companies that produce pollution while manufacturing quality products, it is safe to say that each of them would be affected equally and would raise their prices as a result. This is truer among energy producers.

2. It could create an industry that is full of deception.
The policy is based on accurate reports companies will be reporting about the amount of pollution they will contribute. Now, if it were to be implemented, many people argue that it would cause the energy industries to make deceptive reports. Though inspections by regulators of various industrial sites would prevent this from happening, there comes the challenge of not having enough regulators to get the job done.

3. It can lead companies in the wrong direction.
Energy industry leaders expressed their opposition against Cap and Trade, believing that it will harm the advancement of green technology. With such a system in place, companies are expected to start using coal, gas and oil because of the cheaper offset these sources have. As a result, the demand for these resources would rise and the interest in renewable energy sources would be limited.

Cap and Trade definitely has its own set of pros and cons, and based on the ones listed above, do you think it would be helpful or not?