shows that per capita use of fuel for driving in developed countries decreases as the amount of the gas fee increases. The
- The level of the emissions cap was determined largely by each nation independently;
- It included only power plants with a capacity greater than 20 MW, and other industrial facilities; these represented 42% of emissions; and
- Allocations of emission allowances relied primarily on recent historical records; they were offered at no cost.
- The level of the emissions cap conformed to the limits of the Kyoto Protocol; and
- Limits on emissions from air travel were to begin in 2012.
- National emissions caps were to be replaced by a single EU-wide cap; they decrease by 1.74% per year starting in 2010 with the objective of delivering 21% reduction referenced to 2005 by 2020;
- 90% of the allowances will be sold by auction rather than being distributed free of cost.
Two major mechanisms have been devised to abate the emission of CO2, a major greenhouse gas, (aside from the important contribution of increasing the efficiency of energy usage). One, a cap and trade regime, operates primarily by capping the supply of energy. (Of course the auction price imposed on allowances has the effect of raising the price of the energy purchased by the consumer, so cap and trade may also have elements of lowering energy demand as well.) The second, a carbon fee applied in proportion to the amount of CO2 emitted when the fossil fuel is burned, directly limits demand by raising the price paid for energy.
The time to begin abating humanity’s emissions of CO2, a major greenhouse gas, is now. The longer we wait, the more firmly we cement our dependence on fossil fuels, and the more CO2 accumulates in the atmosphere, exacerbating global warming and its damaging effects on human life and welfare. The simplest, most direct, and highly effective mechanism for reducing dependence on fossil fuels and mitigate emissions of GHGs is to apply a carbon fee.