ETS: EU & CBIO
Two other carbon instruments that exist are:
(1). Carbon Taxes, and (2). Voluntary credits.
The first, Carbon Taxes, are used in countries with a greater presence of the State in the economy and a greater culture of social democracy, such as Scandinavian countries and France. Experts believe that the “carbon tax” is less efficient than the “cap and trade” market system, because the carbon price could be established at too high or too low a level, as it is arbitrarily determined by the government or regulator. It can end up burdening the most carbon intensive industries in an unnecessarily high manner and causing an excessively harmful economic impact. There is also a risk that the price will be set at low levels, and that it will not lead to an incentive high enough for companies to reduce their GHG emission.
Carbon Tax (Scandinavia, France)
Estimated average percent change in energy prices in 2030 due to carbon tax
One must remember that the distribution of these resources across the economy may also end up being arbitrary and political. The government can decide to spend this tax revenue on health, education and part of it can disappear via corruption - in short, this money can be distributed inefficiently, and it may not end up being used in developing new, less carbon intensive technologies or encouraging new ways of cleaner production, as in the case of “cap and trade” systems.
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