How lucky are you if you are studying market failure at the moment? Very. Because the debate is raging on how we can reduce carbon emissions. Should we use taxes, tradable permits or - as outlined here - personal limits. The arguments for reducing carbon are obvious: we'd quite like to survive as a species and we won't be able to do that when the temperature's 250 degrees. The arguments against carbon taxes are that they are potentially regressive, although it is likely that the more you consume, the more carbon taxes you would have to pay. In other words, the rich and wasteful would be taxed heavily whereas we frugal paupers would pay less.
This new idea of having limits and then buying permits or credits from others would be extremely complicated and expensive to implement (£2bn) and run (£1bn per year), but the scheme would be transparent. And something does need to be done.
Should this be the government's priority though? What about industry? They belch out more carbon dioxide than consumers.
BBC NEWS | Politics | MPs back personal carbon credits
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