On April 16, 2013, the European Parliament voted against the environmental policy of emissionstrading. The Emissions Trading System works as a ‘cap and trade’ principle which allows producers to emit a set level of carbon and other greenhouse gases from their factories and power plants. Companies all over the world buy and trade emission allowances to eventually cut down on high-carbon technologies. The recent problems with this system is that 16 billion tons of carbon are allowed to emitted between 2013 and 2020; recession caused a decrease in demand for trading permits; and too many allowances have been granted launching an excess of carbon supply and fallen prices. A proposal from the European Commission called “backloading” would take 900m tons of carbon allowances off the current market to help strengthen the demand for permits. This plan and the trading system as a whole are still in debate. It’s not that Parliament is against the concept of the ETS. European companies just don’t want higher carbon prices imposed on them. But voting against the ETS will make it harder to set up a world carbon price. In Europe, once carbon goes cheap, coal would look more attractive to use than natural gas, making the price of pollution greater. The vote does not end all debate but some environmentalist fear that European climate policy will focus more on the costs than the benefits. (Economist)
I do believe that the Emissions Trading System would be a good idea but policy makers have to prioritize and vote on something that offsets a cost but brings just an equal benefit. Greenhouse gases are the cause of global warming and yes, a price or tax should be imposed. Even though emissions are “bad” to the environment, we also have to think about how carbon use helps fuel the economy through manufacturers. I would lean towards the trading system just because the use of carbon is monitored whereas a tax fluctuates with variable unregulated use.