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In its current version, the Lieberman-Warner Climate Security Act, as the bill is known, would cap American carbon consumption through a tradeable permit plan.
One goal of a tradeable permit system is to force consumer prices for goods to reflect the harm that the production of those goods causes the planet.
Within tradeable permit systems, I consider both credit programs and cap-and-trade systems.
This industrial rent-seeking most prominently leads to a grandfathered permit allocation rule like the one found in the US tradeable permit systems.
We investigate whether an IAS tradeable permit program could provide an efficient alternative, keeping in mind that: (1) not every vessel will actually emit a species, yet ex ante each vessel is a potential emitter; (2) biological emissions are highly stochastic and essentially unobservable given current monitoring technologies.
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Even among those who support tradeable permits, there is considerable debate about what level of emissions reductions is realistic.
From steel tariffs (which he opposed) to climate policy (where he unsuccessfully proposed mandatory emissions caps and tradeable permits), this administration has often placed politics above economics.
If an effective system of global control of carbon dioxide emissions is ever created, it will most likely involve a system of tradeable permits.
In order to make sure the reductions are achieved at the lowest possible cost, the report argues the government should auction tradeable permits that allow businesses to emit more, but still keep the overall national targets.
One approach to this dilemma has been the attempt to "internalise" these "externalities" by using market strategies like ecotaxes and incentives, tradeable permits for carbon, and the encouragement of payment for ecosystem services.
Modern regulations reject command-and-control tactics in favor of "such efficiency-oriented instruments as tradeable permits, corrective taxes, … and other tools designed to replicate the conditions of a well-functioning market".
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com