I went to International Colloquium on Global Environmental sustainability at CSU and attended “Economic Insights on Climate Policy: Global to domestic”. One of the speakers mentioned various public policies for climate sustainability and his argument for such policies interesting.
A topic he brought up was cap and trade. In this policy, the government would set a pollution goal and set up tradable permits to pollute while never exceeding that standard, expecting the magical ways of the market to work it out. The firms who can pollute efficiently will not need permits, so they can sell their excess permits to less efficient firms.
Another one was a tradable Performance standards in which the firms that are polluting at less than the Goal rate of pollution earn credit and those who do not pay taxes for polluting. Essentially the goal was to make it so that the “good” firms wouldn’t have to pay.
Cap and trade policies require payment of both the “good” and the “bad“ firms. Tradable performance standards, he warned, might actually cause an increase in pollution, because good firms are being paid to pollute at a rate, so he was concerned that they wouldn’t stop producing pollution, even if it were at the low rate. So my biggest comment is maybe create a combination of both cap and trade policy and performance standard. These two policies tend to fix each other’s problems. The credit system might help the firms who pollute efficiently, not have to endure the cost of permits and the “cap” part of cap and trade would fix the problem of firms milking the credit system. I believe that a combination of these two policies might actually prove helpful in the environmental sustainably conversation in regards to policy.