Argument: Cap-and-trade will reduce emissions and help climate change

Issue Report: Cap-and-trade versus carbon tax

Support and analysis

Eileen Claussen (president of the Pew Center on Global Climate Change) and Judith Greenwald (director of innovative solutions at the Pew Center), “Handling Climate Change”, Miami Herald, 7/12/07 – “The key difference between a carbon tax and the cap-and-trade approach comes down to the issue of certainty. A tax provides for cost certainty; the cost is fixed because of the tax. Cap and trade, on the other hand, provides for environmental certainty. What’s fixed is the cap itself — and it is based on an assessment of the level of emissions you need to get to in order to protect the climate. In response to a carbon tax, many emitters will reduce their emissions rather than pay the tax, but that result is not guaranteed. With Alaska and Greenland melting, and with droughts and other weather extremes on the rise, environmental certainty would seem to be the more compelling imperative.”

One commentator writes, “With cap-and-trade, you know the emissions but don’t know the cost. With a tax, you know the cost but don’t know the emissions.”[1]