Reference no: EM132055399 , Length: word count : 1300

Topic:

Should the US enact a carbon cap and trade policy after considering it possible effects on the economy?

The economic debate on policy is always a popular topic. You can substitute carbon tax for carbon cap and trade. There are so many possible angles to argue that could be classified as economic arguments that you need to be careful to focus on a few and not try to brush over all of them.

Try to provide point-counterpoint arguments where possible. For example, if you present the argument that cap and trade would be economically harmful for the poor, then make sure to present counterarguments that cap and trade would not cause much economic harm to the poor.

Example arguments against. A cap and trade policy will raise the price (possibly by a large amount) of almost everything since almost everything we buy or do requires energy. This would likely require many to change their lifestyles to adapt. The increased costs of energy and goods will most hurt the poor who simply cannot afford any increase in cost of living and therefore cap and trade should not be done. Given the struggling economy, now is not the time to implement a new government program that will raise costs.

If cap and trade is implemented in the US, it might place our companies at a disadvantage compared with companies operating in places that do not have emission control regulations, which can harm the economy. Some companies may decide to move operations outside of the US, which will mean a loss of jobs. If that happens, the U.S. economy is hurt, and there is no net reduction in worldwide CO2 emissions.

Example arguments for. There are many who say carbon cap and trade is a good economic system because it works within our market based economy. There is an economic incentive for companies to reduce emissions. One can also argue that this increases the economic incentives to develop alternative energy or at least reduce waste. The development of alternative energy could in itself spur economic growth.

Some say that even though costs will go up, they will not go up as much as predicted because the free market will find innovative ways to reduce costs and thus the benefits outweigh the slight economic costs. Some proposals for a US cap and trade policy have provisions for using some of the revenue to help the poor deal with higher energy costs.

One could also argue that although the initial costs to develop alternative energies might be high, this initial investment would pay off in the long run if the price to generate energy from alternative sources becomes less than the price to generate energy from traditional fossil fuel sources. The US may even become a leader in the development and implementation of alternative energy, which can then be marketed to other countries.