http://www.reuters.com/article/GCA-GreenBusiness/idUSTRE54Q4AU20090527
In a recent article from Reuters, authors Frank Pingue and Allan Dowd explain that the province of Ontario has adopted the cap and trade legislation for carbon dioxide and other greenhouse gases in industries (2009). The cap and trade system, or emissions trading, is a form of economic incentive in which there is a limit or cap on the amount of emissions that a group or company can produce. They are then given credits for that limit. When it comes to carbon credits, one credit is equivalent to one metric tonne of carbon. If a company stays under the limit, they will have leftover credits which can be traded off to others for money. Companies that go over the limit will be required to purchase credits from those who have leftovers from staying under the limit. By looking at several environmental principles and laws, it can be seen that by initiating the cap and trade system, Ontario is making the right decision.
First of all, there is the Polluter Pays Principle. This principle states that the party that pollutes must pay. All industries create some form of pollution; however, some produce fewer emissions than others. The Polluter Pays Principle states that they should all pay. With the cap and trade method, it is accepted that all industries will pollute and a limit on emissions is set. Companies that pollute less are rewarded and companies that pollute more than the set limit must pay. This still coincides with the fact that polluter must pay because any company that goes over the limit must pay.
There is also the idea of Ecological Sustainability. There is a definite link between greenhouse gas emissions and climate change. With a change in the climate, ecosystems are under increased pressure and species will either have to adapt or will become extinct.
Next, there is the Human Rights Principle. This principle states that humans have the right to a healthy environment. Since the cap and trade system is an economic incentive, companies are more likely to reduce their emissions. Pingue and Dowd state that in Ontario, the cap and trade system will reduce emissions by 6% below 1990 levels by 2014 and 15% by 2020 (2009). This is mainly due to the fact that companies will be forced to reduce emissions in an effort to save money from the cap and trade system. An environment with fewer emissions would be a healthier environment and according to the Human Right Principle, we all have the right to that.
The Equity Principle must also be considered. This principle states that future generations deserve fairness and justice. In the context of the cap and trade system, this principle is very similar to the Human Rights Principle. It would not be fair to future generations if they are forced to live in a world of low air quality and climate change due to what we failed to do. Reducing emissions would prevent this and can be achieved by the cap and trade system.
This system also falls under the Precautionary Principle which states that we must take action against irreversible damage even if there is no concrete evidence. There is no concrete evidence on the effect that greenhouse gases and climate change will have on the world because it’s difficult to test. However, by reducing emissions through the cap and trade system, we can prevent any irreversible damage that could occur due to emissions and climate change.
The cap and trade system is a good example of an economic incentive. Sometimes, economics and the environment can be seen as two polar ends of a spectrum. However, by applying several key environmental principles, it can be seen that implementing a cap and trade program in Ontario could be very beneficial to the environment.
You describe economics and the environment as often being seen as polar opposites. I agree that this is often the case, and I find it sad that so many think the economy and the environment must be enemies. I believe that economic practices can be carried out with a minimal effect upon the environment, and the adoption of cap-and-trade is an inspiring step in the right direction.
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