The Challenge of GHG Emissions: Assessing the Solutions
By admin July 10, 2018

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Behind the struggle to address global warming and climate change is the increase in greenhouse gases in our atmosphere.  According to a 2017 PBL Netherlands Environmental Assessment Agency report, in 2016, total greenhouse gas (GHG) emissions (excluding those from land use) increased to about 49.3 gigatonnes in CO2 equivalent with carbon dioxide accounting for 72% of the global emissions. The US Environmental Protection Agency (EPA) also reported that in 2017 total emissions from greenhouse gases in the US were 6,511 metric tons of CO2 equivalent with carbon dioxide accounting for 81% of the emissions. Elsewhere in China, the trend was the same with greenhouse gas emissions from carbon dioxide rising by 1.4% or 9.2 Gt CO2. Together, China and US contribute to approximately 45% of global CO2 emissions.

Given that CO2 emissions are the most significant contributor to GHG emissions, experts and policymakers have proposed a carbon tax and cap-and-trade as two of the policies to address global emissions.  A carbon tax directly establishes a price on greenhouse gas emissions so that companies are charged a dollar amount for every ton of emissions they produce; whereas a cap-and-trade program issues a set number of emissions “allowances” each year. These allowances may be auctioned to the highest bidder as well as traded on secondary markets, creating a carbon price.

Proponents of carbon taxes and cap-and-trade policies argue that both reduce emissions by encouraging the lowest-cost emissions reduction without the need for stakeholders to have prior knowledge on when and where these emissions reductions will occur. Furthermore, both policies create the incentive for investors and entrepreneurs to invest in cleantech to develop new low-carbon technologies. Also, both policies generate government revenue that can be allocated to other sectors of the economy. On the flipside, those opposed to these solutions claim that both policies are subject to cost uncertainty. They have asserted that carbon taxes do not offer the same degree of emissions certainty as cap-and-trade and that a cap-and-trade program would suffer during implementation from weak emissions caps, volatility in emissions allowances prices, and overly generous allocations of emissions allowances to regulated entities.

A study by the World Resource Institute titled “Putting a Price on Carbon: Reducing Emissions,” has however suggested the contrary. The team of experts is convinced that if appropriately designed with stringent measures including a “ratcheting mechanism” to adjust tax upward with respect to the carbon tax and adopting of floor and ceiling in the case of cap-and-trade programs, both policies measures can serve as viable solutions to address GHG emissions. Ultimately, both approaches can significantly reduce global greenhouse gas emissions and taper the global energy mix away from fossil fuel to more renewables.


For Further Reading:

Trends in Global CO2 and total greenhouse gas emissions

US Environmental Protection Agency (EPA)

Putting a Price on Carbon: Reducing Emissions

Carbon Tax Vs. Cap-and-Trade: What’s a Better Policy to Cut Emissions?

China’s CO2 grew less than expected in 2017

Pricing Carbon: A Carbon Tax or Cap-and-Trade?


Thanks for sharing !

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