Economic and environmental goals can be co-operatively implemented to achieve a less polluted environment. Those policies and ideas advocating otherwise for instance, the opponents of the Kyoto protocol that was signed in Kyoto, Japan who claim that energy conservation would harm the economy should be reviewed. The two however compliment each other since some emission reduction strategies also support economic development.
Studies done in the US have prompted some to conclude that the benefits of subsidies remain elusive. However there are strong reasons to include these multibeneficiary programs in the efforts to reduce GHG emissions. Efforts should be channeled to developing Innovative ways such as the application of subsidy justification assessment to reduce uncertainty. Subsidies are a powerful incentive that does not contradict the economic objectives of corporations and can thus form the moral fiber of such strategies aimed at reducing emissions. The question is therefore not whether subsidies should be used as a strategy to reduce emissions but rather how they are used and how the use of these strategies can be used more effectively.
These subsidies are implemented in different governments for different reasons. For instance, a countrys could enhance international competitiveness by keeping the business costs down. Since energy is used in every aspect of modern life, higher energy prices should increase not only the direct cost of the energy used by companies but also most of other expenses as well.
Before commencing on to the possible strategies that can be adopted, it is of great importance to understand the cause of all these environmental catastrophes and the effect that they have on the environment and on human beings. Global warming and climate change have dominated the world debate over the past few decades. This is because the world temperatures have been rising at an alarming rate. The rise in temperatures can be attributed to the increase in the emissions of greenhouse gasses such carbon dioxide, methane, ozone and nitrous oxide. These gasses trap heat on the earths surface and cause what is referred to as the greenhouse effect characterized by uncontrolled rise in temperature on the earths surface. The effects of such climate changes include rise in sea levels, abnormal melting of glaciers, expansion of subtropical deserts, extinction of some animal and plant species as well changes in agricultural yields. Other environmental problems are caused mainly by pollution arising from human activities such as fossil dumping and chemical wastes dumping into rivers and other water bodies. Most of these activities have been seen to have direct impacts on both human beings and the environment. In order to avert such impacts, the following alternative measures should be taken.
Revenue tax policy
First and foremost, the environmental departments and all the other stakeholders need to come up with a revenue-neutral tax-subsidy policy for carbon emission reduction. In this policy, the environmental departments can decide to develop alternative fuel sources to reduce dependency on fossil fuels and thus mitigate emission of greenhouse gases arising from consumption of this fuel. This is because approximately 75 of carbon dioxide emissions are as a result of combustion of fossil fuels. Bio-fuels have therefore been touted to be viable alternative to the fossil fuels with the main purpose of lowering carbon emissions from combustion engines. Examples of bio-fuels include corn ethanol which emits almost 22 less greenhouse gas than gasoline. Given similar energy that is equivalent from a coal power plant that usually produces approximately 5 of the net emissions while taking into account the carbon sequestration potential of trees during growth, there is a considerable amount of carbon reduced. (School of economic studies) In addition to that, there can be an introduction of carbon tax as means of addressing the externalities that are associated with carbon dioxide emissions that arise from fuel production and use. In order to promote the use of alternative fuels, the Federal Government and other governments can introduce bio-fuel. This entails increasing the level of consumption of renewable fuels ranging from 9 billions gallons that was consumed in 2002 to around 36 billion gallon that was consumed in 2008. By 2008 consumption standard, it is estimated that there was a 7.76 renewable fuel content of motor fuels.
This will lead to roughly 24 ethanol content in gasoline by 2002. Furthermore, the Energy Security and Independence Act in America impose a requirement that an increasing fraction of renewable fuels be comprised of advance bio-fuels based on biomass and alternative types this only goes further to improve the situation. Bio-fuel has been used as a subsidy because of two main reasons. One of them is the changing relative price of motor fuels in favor of renewable fuels which have a lower carbon emission. The second reason is that it reduces the dependency on fossil fuels through technological innovations. The subsidies that can help in technological innovation in the production of bio-fuels and mitigation of greenhouse gases can be applied at both the state and federal level. They help in decreasing renewable fuel production costs while improving the economic viability of bio-fuels in the long run.
Subsidies are ranked high among the instruments that are frequently used in environmental policy making. They are simply the most efficient instrument to achieve both short term and long term environmental objectives.
Another subsidy that can be used to mitigate carbon emissions is through introduction of abetment technologies in factories and industries. The carbon abatement technologies are group of innovative technological advancements that enable the large industrial plants to operate with substantially reduced carbon dioxide emissions. These technologies have the capacity to reduce carbon emissions up to 90 and still retain a significant amount of export potential. It involves the efficiency of conversion processes to reduce the amount of fuel consumed and associated carbon dioxide emissions.
An example of an abetment technology is the developments of boiler technologies for efficient coal combustion and advanced steam and gas turbine technologies that accommodate higher temperatures. These technologies will help to capture carbon dioxide, both pre and post combustion and oxy-fuel firing to improve their efficiency and thus reduce capital running costs. This is important since technological change is considered the primary solution to the environmental problems in the long-run. It has also been recognized that environmental policies create incentives that affects the whole process of technological development.
Emission standards
Emission standards are vital in the current environmental situation. They put in place specific requirements requiring all concerned especially the industrial polluters to limit the amount of pollutants they release in to the atmosphere up to a given maximum level. Automobile emissions are also checked this is evident in the continued improvements being done on motor vehicles. Most of them nowadays are low emitters.
Such regulations if strictly followed can lead to attainment of an environment where the least possible pollutants are emitted .Emission licenses can only improve the situation all the more. Emission licenses can be used to ensure that more and more efficient motor cars and industries continuously replace the less efficient and thus more polluting ones. This can be achieved by making it a requirement that the level of efficiency be reviewed annually upon which a license would be issued .This will completely phase out those that are not compliant.
Transferable discharge permits
Closely related to emission standards are transferable discharge permits. They revolve around Marginal Abatement Cost (MAC) set by governments .They can be applied to reduce pollution by issuing licenses on the maximum possible amount that a given operator for example a given industry can be allowed to emit during a given period. This goes along way in ensuring the relative amount of pollutants that will or should be emitted during a given period.
Abatement Policy
In order to implement abatement policies, the government can impose two types of fiscal measures the pollution tax and lump-sum subsidy. The regulator which in this case is the government can either construct a menu or subsidy combinations to induce firms to self select. On the other hand the regulator can impose a uniform policy on all the registered firms within the industry commonly called a pooling policy. While doing this, the policy regulator can also construct a set of subsidy combinations that induce all firms to self-select the direction they want to take.
The key determinants of the policy that can be adopted include the marginal abatement costs of the technologies. This simply means that the lower the marginal abatement costs the more pollution that is abated which in turn means the smaller is the pollution tax base. A smaller tax base means an increase in the pollution tax rate that the firms are willing to accept for an extra dollar of the subsidies. This creates more efficient firms which tend to prefer higher tax combination.
Emission fees
Environmental conservation meets Economics in Pigouvian taxes. Pigouvian taxes are fees charged on a given output of pollutants into the environment. It is basically an additional charge for additional emission of pollutants in to the environment over and above the set maximum limit. These are geared towards reducing significantly the amount of pollution while at the same time achieving effectiveness and efficiency in production and operation of other emitters like motor vehicles.
Pigouvian taxes comes not without challenges though, they can only be applied successfully if and only if proper mechanisms are put in place to measure the amount of pollutants released into the environment. This is because, unlike other commodities on which taxes are levied, pollutants are not taken to the market. As a matter of fact some will be tempted to dump pollutants at odd places and at odd hours to evade paying the Pigouvian tax.
Firms with higher Marginal Abatement Cost are allowed to sell to those with lower Marginal Abatement Cost if they are sure that they cannot exhaust their share. This encourages firms across the economy to improve on their efficiency and in turn reduce the amount of pollution to the environment. This is a very good method of controlling pollution since the charges associated with going against these regulations are enormous. Therefore the governments have almost absolute control over the whole issue of pollution, economically speaking.
Voluntary environmental programs
Voluntary environmental programs comprised of firms operating in the same industry are another method which can help greatly in reduction of pollutants emission and their accompanying effects. A perfect example to point at is that of US Chemical manufacturers Association which have designed its own regulations which must be religiously followed by member firms in an effort to reduce to the greatest extent possible the amount of pollution associated with that industry.
This is advantageous not only for the primary reason of environmental conversation but also to marketing strategies of those firms. As more and more firms go global, they would like to be seen as sustainable and would thus employ this as a promotional gimmick through corporate social responsibility. The firms also argue that the more they fight pollution, the more they become efficient since they associate more pollution with increased inefficiency.
Reducing emissions is a matter of international importance and should be given the urgent attention it deserves. Any time lost in indecision by the world governments and policy makers is too costly. The policy makers and the firms need to give priority to efforts aimed at conserving the environment. They need to among other things adopt the measures above to ensure that they run cost effective firms and at the same time ensure that the environment remain free from carbon emissions and other pollutants.
As the business environment gains momentum towards globalization, the government and other stakeholders should be more innovative to come up and implement new policies, economic or otherwise to counter the dynamic environmental conservation challenges. These policies should be such that just like most of those discussed above they serve two or more purposes at the same time conserving the environment and achieving increased efficiency in the operations of these stakeholders.
Most importantly ethical operations of all concerned can influence to a great extent how these policies, economic or otherwise achieve the desired results. These should therefore be emphasized at all times even as charges, taxes and penalties are imposed.
Studies done in the US have prompted some to conclude that the benefits of subsidies remain elusive. However there are strong reasons to include these multibeneficiary programs in the efforts to reduce GHG emissions. Efforts should be channeled to developing Innovative ways such as the application of subsidy justification assessment to reduce uncertainty. Subsidies are a powerful incentive that does not contradict the economic objectives of corporations and can thus form the moral fiber of such strategies aimed at reducing emissions. The question is therefore not whether subsidies should be used as a strategy to reduce emissions but rather how they are used and how the use of these strategies can be used more effectively.
These subsidies are implemented in different governments for different reasons. For instance, a countrys could enhance international competitiveness by keeping the business costs down. Since energy is used in every aspect of modern life, higher energy prices should increase not only the direct cost of the energy used by companies but also most of other expenses as well.
Before commencing on to the possible strategies that can be adopted, it is of great importance to understand the cause of all these environmental catastrophes and the effect that they have on the environment and on human beings. Global warming and climate change have dominated the world debate over the past few decades. This is because the world temperatures have been rising at an alarming rate. The rise in temperatures can be attributed to the increase in the emissions of greenhouse gasses such carbon dioxide, methane, ozone and nitrous oxide. These gasses trap heat on the earths surface and cause what is referred to as the greenhouse effect characterized by uncontrolled rise in temperature on the earths surface. The effects of such climate changes include rise in sea levels, abnormal melting of glaciers, expansion of subtropical deserts, extinction of some animal and plant species as well changes in agricultural yields. Other environmental problems are caused mainly by pollution arising from human activities such as fossil dumping and chemical wastes dumping into rivers and other water bodies. Most of these activities have been seen to have direct impacts on both human beings and the environment. In order to avert such impacts, the following alternative measures should be taken.
Revenue tax policy
First and foremost, the environmental departments and all the other stakeholders need to come up with a revenue-neutral tax-subsidy policy for carbon emission reduction. In this policy, the environmental departments can decide to develop alternative fuel sources to reduce dependency on fossil fuels and thus mitigate emission of greenhouse gases arising from consumption of this fuel. This is because approximately 75 of carbon dioxide emissions are as a result of combustion of fossil fuels. Bio-fuels have therefore been touted to be viable alternative to the fossil fuels with the main purpose of lowering carbon emissions from combustion engines. Examples of bio-fuels include corn ethanol which emits almost 22 less greenhouse gas than gasoline. Given similar energy that is equivalent from a coal power plant that usually produces approximately 5 of the net emissions while taking into account the carbon sequestration potential of trees during growth, there is a considerable amount of carbon reduced. (School of economic studies) In addition to that, there can be an introduction of carbon tax as means of addressing the externalities that are associated with carbon dioxide emissions that arise from fuel production and use. In order to promote the use of alternative fuels, the Federal Government and other governments can introduce bio-fuel. This entails increasing the level of consumption of renewable fuels ranging from 9 billions gallons that was consumed in 2002 to around 36 billion gallon that was consumed in 2008. By 2008 consumption standard, it is estimated that there was a 7.76 renewable fuel content of motor fuels.
This will lead to roughly 24 ethanol content in gasoline by 2002. Furthermore, the Energy Security and Independence Act in America impose a requirement that an increasing fraction of renewable fuels be comprised of advance bio-fuels based on biomass and alternative types this only goes further to improve the situation. Bio-fuel has been used as a subsidy because of two main reasons. One of them is the changing relative price of motor fuels in favor of renewable fuels which have a lower carbon emission. The second reason is that it reduces the dependency on fossil fuels through technological innovations. The subsidies that can help in technological innovation in the production of bio-fuels and mitigation of greenhouse gases can be applied at both the state and federal level. They help in decreasing renewable fuel production costs while improving the economic viability of bio-fuels in the long run.
Subsidies are ranked high among the instruments that are frequently used in environmental policy making. They are simply the most efficient instrument to achieve both short term and long term environmental objectives.
Another subsidy that can be used to mitigate carbon emissions is through introduction of abetment technologies in factories and industries. The carbon abatement technologies are group of innovative technological advancements that enable the large industrial plants to operate with substantially reduced carbon dioxide emissions. These technologies have the capacity to reduce carbon emissions up to 90 and still retain a significant amount of export potential. It involves the efficiency of conversion processes to reduce the amount of fuel consumed and associated carbon dioxide emissions.
An example of an abetment technology is the developments of boiler technologies for efficient coal combustion and advanced steam and gas turbine technologies that accommodate higher temperatures. These technologies will help to capture carbon dioxide, both pre and post combustion and oxy-fuel firing to improve their efficiency and thus reduce capital running costs. This is important since technological change is considered the primary solution to the environmental problems in the long-run. It has also been recognized that environmental policies create incentives that affects the whole process of technological development.
Emission standards
Emission standards are vital in the current environmental situation. They put in place specific requirements requiring all concerned especially the industrial polluters to limit the amount of pollutants they release in to the atmosphere up to a given maximum level. Automobile emissions are also checked this is evident in the continued improvements being done on motor vehicles. Most of them nowadays are low emitters.
Such regulations if strictly followed can lead to attainment of an environment where the least possible pollutants are emitted .Emission licenses can only improve the situation all the more. Emission licenses can be used to ensure that more and more efficient motor cars and industries continuously replace the less efficient and thus more polluting ones. This can be achieved by making it a requirement that the level of efficiency be reviewed annually upon which a license would be issued .This will completely phase out those that are not compliant.
Transferable discharge permits
Closely related to emission standards are transferable discharge permits. They revolve around Marginal Abatement Cost (MAC) set by governments .They can be applied to reduce pollution by issuing licenses on the maximum possible amount that a given operator for example a given industry can be allowed to emit during a given period. This goes along way in ensuring the relative amount of pollutants that will or should be emitted during a given period.
Abatement Policy
In order to implement abatement policies, the government can impose two types of fiscal measures the pollution tax and lump-sum subsidy. The regulator which in this case is the government can either construct a menu or subsidy combinations to induce firms to self select. On the other hand the regulator can impose a uniform policy on all the registered firms within the industry commonly called a pooling policy. While doing this, the policy regulator can also construct a set of subsidy combinations that induce all firms to self-select the direction they want to take.
The key determinants of the policy that can be adopted include the marginal abatement costs of the technologies. This simply means that the lower the marginal abatement costs the more pollution that is abated which in turn means the smaller is the pollution tax base. A smaller tax base means an increase in the pollution tax rate that the firms are willing to accept for an extra dollar of the subsidies. This creates more efficient firms which tend to prefer higher tax combination.
Emission fees
Environmental conservation meets Economics in Pigouvian taxes. Pigouvian taxes are fees charged on a given output of pollutants into the environment. It is basically an additional charge for additional emission of pollutants in to the environment over and above the set maximum limit. These are geared towards reducing significantly the amount of pollution while at the same time achieving effectiveness and efficiency in production and operation of other emitters like motor vehicles.
Pigouvian taxes comes not without challenges though, they can only be applied successfully if and only if proper mechanisms are put in place to measure the amount of pollutants released into the environment. This is because, unlike other commodities on which taxes are levied, pollutants are not taken to the market. As a matter of fact some will be tempted to dump pollutants at odd places and at odd hours to evade paying the Pigouvian tax.
Firms with higher Marginal Abatement Cost are allowed to sell to those with lower Marginal Abatement Cost if they are sure that they cannot exhaust their share. This encourages firms across the economy to improve on their efficiency and in turn reduce the amount of pollution to the environment. This is a very good method of controlling pollution since the charges associated with going against these regulations are enormous. Therefore the governments have almost absolute control over the whole issue of pollution, economically speaking.
Voluntary environmental programs
Voluntary environmental programs comprised of firms operating in the same industry are another method which can help greatly in reduction of pollutants emission and their accompanying effects. A perfect example to point at is that of US Chemical manufacturers Association which have designed its own regulations which must be religiously followed by member firms in an effort to reduce to the greatest extent possible the amount of pollution associated with that industry.
This is advantageous not only for the primary reason of environmental conversation but also to marketing strategies of those firms. As more and more firms go global, they would like to be seen as sustainable and would thus employ this as a promotional gimmick through corporate social responsibility. The firms also argue that the more they fight pollution, the more they become efficient since they associate more pollution with increased inefficiency.
Reducing emissions is a matter of international importance and should be given the urgent attention it deserves. Any time lost in indecision by the world governments and policy makers is too costly. The policy makers and the firms need to give priority to efforts aimed at conserving the environment. They need to among other things adopt the measures above to ensure that they run cost effective firms and at the same time ensure that the environment remain free from carbon emissions and other pollutants.
As the business environment gains momentum towards globalization, the government and other stakeholders should be more innovative to come up and implement new policies, economic or otherwise to counter the dynamic environmental conservation challenges. These policies should be such that just like most of those discussed above they serve two or more purposes at the same time conserving the environment and achieving increased efficiency in the operations of these stakeholders.
Most importantly ethical operations of all concerned can influence to a great extent how these policies, economic or otherwise achieve the desired results. These should therefore be emphasized at all times even as charges, taxes and penalties are imposed.
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