Summary of Cap and Trade
Cap and Trade
Group Members:
(Pro) Maria Angela Ingco
Armando Ascencio
Chris Mihiar
Steven Newberg
Anthony Torres
(Con)
Luis Garcia
Eduardo Barrera
Norman Mao
Zareh Baghdassarian
Spencer Jones
Summary of Cap and Trade
Resolution: The environmental policy of cap-and-trade will reduce carbon dioxide emissions and serve
the interest of the Republic.
I. Pro Arguments
1. Political Issues - Maria Angela Ingco
The main political issue of cap and trade is that it is a program that the government is responsible for.
In order to remove the negative externalities that comes along with pollution, the government is
obligated in putting forth programs that would serve the interest of the republic. These interests
include the betterment of society's health and safety, policies that would improve our agriculture and
water supply.
2. Political Support - Armando Ascencio
The evidence provided in support is the acid rain program established in the Clean Air Act of 1990
under article IV. This program capped the amount of sulfur oxide that was emitted into the
atmosphere and limit the amounts of nitrous oxide as well. This program was largely successful in
decreasing the sulfur oxide emissions from power plants 9 percent since 2000. Many people
speculated that the program would be a huge cost in energy to consumers and it would cause loss of
jobs, they were all proven wrong.
3. Economic Issues - Chris Mihiar
-Given stated political goals, economists are tasked with achieving the goals at the lowest cost. To this
end, we recommend implementation of a cap and trade system for the United States.
- Cap and Trade model:
- Set overall emissions cap
- Allocate property rights (emissions permits)
- Equimarginal principle
- coase theorem
4. Economic Support - Steven Newberg
The evidence to support CAP comes from the European Union Emission Trading Scheme (EU ETS) and
shows that the European Union was able to reduce carbon emissions through a CAP and did not
experience a decrease in GDP. This supports the argument that a CAP is both efficient and will reduce
carbon emissions. The use of CAP is the most efficient means possible of reducing carbon emissions.
The problem with associating current costs with CAP is that the benefits are either in the future or not
quantifiable and the benefits of reducing carbon emissions are very high.
5. Rebuttal - Anthony Torres
The opposition proposes that there is insufficient evidence to support politically that government
intervention would reduce the emissions that cause climate change.
-Sulfur Dioxide Program in the 1990s was a success in reducing acid rain by 65%
The opposition proposes that economically Cap and Trade could produce price manipulation within
the market.
Summary of Cap and Trade
II. Con Arguments
1. & 2. Political Issues and Support - Luis Garcia and Eduardo Barrera
-Cap and trade cannot be argued as being successful because there was a cap on sulfur dioxide but
actually little trade. Also there was little technological innovation in methods, machines,
infrastructure. This cap and trade was also only regional--northeast-- a very small area compared with
the much larger continuous 48 states so again cannot claim success--would it work for much larger
area. The Obama administration proposed a national cap and trade program that included a tariff
which potentially could lead to a global trade war. Once again an excuse for big government making an
excuse to tax and regulate our lives.
3. Economic Issues - Zareh Baghdassarian
Problems with CAP lie in the details of implementation and the theory behind it.
There is no clear-cut way of distributing permits to industry polluters. All options (selling, auctioning,
distributing based on current emissions, etc.) have problems.
The assumption made is that the created market will result in a perfectly competitive structure,
however, some of the key ideas do not fit within the market structure.
Distributing permits and operating on a trading platform may not decrease transaction costs to an
efficient level
4. Economic Support - Norman Mao
-The result from enacting the cap and trade policy of Waxman and Markey in the United States
without cooperation from other advanced countries would only provide a trivial reduction in carbon
dioxide.
-Carbon dioxide emission reduction in the U.S. by 15% would result in an increase in household living
cost of 1,600 dollars per household with only a 4 percent reduction globally.
-The net cost incurred on the US from the implementation of Cap and Trade policies would total nearly
3.5 trillion dollars, heavily offsetting the benefit of an 83 percent cut in carbon dioxide emissions.
-The cap and trade effect on the coal-based energy industry in certain states would ruin their gross
domestic product by eliminating jobs and incurring heavy costs on manufacturing via energy price
increases.
5. Rebuttal - Spencer Jones
The economic theory behind cap and trade is an ideal model of the way carbon emission would
diminish emissions. The reality is that there is a political system that will alter the implementation of
the model from entrenched interest groups and lobbyist. Therefore, the implementation of the model
has various fault such as free permits for industries that have a lot of financial pull in the
implementation. The evidence about the acid rain scenario cannot be applied to a global problem that
has an international problem. Acid rain was effective because the problems could be controlled
domestically instead of internationally. The evidence on Europe emission reduction is also negligible
compared to emissions globally. As long as emerging countries like China and India doesn't comply
with Cap and Trade implementing at a national level is ineffective.