Climate Change Policy: Cap and Trade & Carbon Tax

Categories: Climate Change

This paper looks at the current Federal and state laws regarding climate change’s policy, the financial cost of the status quo, as well as a few policy alternatives that are commonly suggested to improve this policy’s outcomes. 

This is an issue that is important because if it continues to worsen, it will affect everyone that lives on this planet in a variety of different ways. One of these ways is that global temperatures will continue to rise as they have been in the past few decades.

According to NASA, “The planet's average surface temperature has risen about 1.62 degrees Fahrenheit (0.9 degrees Celsius) since the late 19th century” (Climate Change). Not to mention the oceans are warming as well as the sea level rising about “8 inches in the last decade” (Climate Change). This is caused by all the ice that is melting in the North and South Poles. Furthermore, our whole world will be thrown off balance due to this issue with seasons such as summer lasting longer and being hotter than they normally are.

Because of all these reasons discussed briefly above, climate change is an issue and a policy that is important to those living on Earth which is why it should be given attention.

Currently, California has state laws in place that try to focus on correcting climate change. Some examples of this are Assembly Bill (AB) 32, also known as the Global Warming Solutions Act, enacted in 2006 “which requires the state to reduce GHG [greenhouse gas] emissions to 1990 levels by 2020” (Escriva-Bou).

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Additionally, established in 2014, there is SB 1275 which is a goal of California’s to have one million zero-emission vehicles or those that are very near zero-emissions in service by 2020. Assembly Bill 398 put into action on July 25th, 2017 plans to extend the Cap and Trade Program which will “enable the state to meet its 2030 emission reduction goals in the most cost-effective manner” (California). This state currently has many bills in place in order to provide a solution for climate change, and these are just a few of those that are active as of today.

In addition to the state laws that attempt to address climate change in the form of different public policies, there are also federal regulations that apply to the whole nation instead of simply one region. As of this moment, it seems as if a lot of the federal laws that are in place regarding climate change wish to be repealed by President Trump, or this nation has already been withdrawn from those policies. Trump announced on June 1st, 2017 that the U.S. would be removing itself from the famous Paris Climate Agreement which “mandates that signatory countries pledge to reduce carbon dioxide and similar emissions in an effort to limit human-caused climate change” (Federal). There has been a proposed repeal of the Clean Power Plan that sets a standard for the amount of carbon power plants are allowed to burn and emit into the atmosphere. Trump is trying to repeal these policies because he claims they hurt jobs, and these laws in the long run will not affect the temperatures on this planet by very much. Therefore, a lot of the federal laws in place currently are in danger of being revoked due to the president in office. This includes the Clean Air Act which came about in 2009 when the Environmental Protection Agency discovered that GHGs endanger the public and their health. They came up with this act which attempts to regulate such gases as air pollutants.

The issue of climate change has policies at the state and federal level because it is an issue that is global, hence its name global warming. It is not only going to affect people in Sacramento but those across the Pacific and Atlantic Oceans and even beyond that. One of the mechanisms in which it will affect individuals will be through “more extreme weather events and wildfires, decreased air quality, and diseases transmitted by insects, food, and water” (Impacts). Focusing in on the state and local level, one can see who climate change is affecting and how. Just recently in California there was the Camp Fire which was one of the most deadly fires in all this state’s history. As of a report that came out on December 3rd, eighty-five people were killed in this fire. There was a study done that claimed since 1980, climate change has been the result of wildfires in the West coast burning nearly two times as much as they normally would have (Simultaneous). Furthermore, speaking only in terms of California, it seems as if the winter season is starting later, causing less precipitation to occur, and summer is beginning a lot earlier than it used to. This only intensifies the fires that we are getting in this state, meaning more damage will come as a result of them.

As residents of California, the evidence of global warming is right in front of our eyes; however, despite this, there are still a large majority of individuals who are reluctant to believe that it is a pressing issue. However, if one were to triangulate the research on this issue from the many different political leanings, there is a strong consensus that global warming is a real problem. It is going to affect everyone on Earth unless effective policies are put into place to help combat it. From a righty-republican source, Cato Institute, they conclude that “Global warming is indeed real, and human activity has been a contributor since 1975” (Michaels). Both center right and left sites claim that climate change is something that needs to be addressed. And most obviously left-liberal sources, such as Center for American Progress, which claims that global warming is “threatening lives, destabilizing states, and disrupting economies in ways an adversarial state might using different means” (Sofer). Not only do these sources with different political leanings agree that global warming is a real issue as shown by an assessment report down by the Intergovernmental Panel on Climate Change. In this document written by many scientists and climate experts, they stated, “Warming of the climate system is unequivocal, and since the 1950s, many of the observed changes are unprecedented over decades to millennia” (Scientists).

With this in mind, there are two policy options that should be considered in regards to the issue of climate change. The first is carbon tax which imposes a fee on carbon-based fuels including oil, gas, and coal. This is paid whenever these energy sources are mined or as soon as they are put into the market. However, if allowed with market conditions, suppliers and processors of carbon-based fuel can pass this tax along. As good as this policy alternative sounds, it does not come free from charge.

Carbon tax’s financial cost is also caught up with the cons that come with it. If the cost of utilizing fossil fuels is to be raised, than the price of manufacturing the goods that typically require the use of that energy source will go up as well. Individuals would then use other items and services that are cheaper. If the revenue from carbon tax are not accounted for, negative effects would take place on the economy. People would have less purchasing power which means that a person’s wages would be reduced due to inflation caused by carbon tax. Less money in circulation for individuals with jobs would reduce the overall supply of labor, a very negative effect on the economy. Furthermore, carbon tax costs would not be evenly spread among households in the United States with the lower-income families getting the brunt of it. This is due to the fact that “low-income households generally spend a larger percentage of their income on emission-intensive goods” (Effects). Places which use a lot of electricity fueled by coal would experience much higher prices due to a carbon tax.

Carbon tax is effective, however, because it gives those who consume and make these fuels a motive to slow down their CO2 emissions (What’s).



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Climate Change Policy: Cap and Trade & Carbon Tax. (2021, Oct 31). Retrieved from

Climate Change Policy: Cap and Trade & Carbon Tax
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