1.Why do you think tradeable pollution permits are more politically viable than a direct tax on firms’ carbon emissions?

Tradable pollution permits are more politically viable than a tax because even if large producers of pollution are taxed, the prices will increase but they are still able to pollute, whereas if permits are used the supply can be altered which ultimately reduces the amount of pollution produced by firms. Taxes are also recieved negatively and it is hard to establish prices whereas prices for permits are set by the market.

2.Why did Europe’s carbon emission permit market fail to reduce emissions over its first couple of years of implementation?

Europe's carbon emission permit market failed because the supply of permits was too high and the prices were too low in order to decrease demand and force people to produce less pollution.

3.Is making firms pay to pollute a good idea in the middle of a recession? Do you think that we should even be worrying about the environment when millions of people are losing their jobs and entire industries are struggling to survive?

There is never a good time start making people pay to pollute and although the recession may not be a perfect time to move this forward, the enivronment is a constant problem that won't go away based on our financial problems, and it's our responsibility to do something to fix it. We can't ignore certain issues because we are faced with other problems such as a recession, governments just need to find a way to introduce this in a way that won't further hurt the economy.

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2. It failed in the first couple of years because the governments were handing out permits to firms too freely without restricting the supply, which defeated the purpose of the permit. There was a great demand for the permits but there was a great supply too, for they were not limited yet like intended in order to create a scarce supply.

3. I believe in finding a balance between charging firms to pollute during a recession, but I don't believe the whole permit should be eradication; it would be best if the permits were still in place but not at a large price that could further contribute to the loss of jobs. There should be different priced permits for different sized firms so small firms don't find them self in a position to drastically let go employees or shut down, because the obvious choice for the firm would be to fire people. When the recession is over the price of the permits can gradually increase.

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A "free market" of permits created through this government intervention will reach a stable equilibrium where everybody is doing they best they can. Efficiency will be forced because firms are directly spending money to gain the rights to pollute – they're going to pollute as efficiently as possible to make use of that money spent. This incentive to be efficient will drive progress and development of new technology that reduces pollution.

2.

There were so many permits in the permit market that it was inexpensive to buy more permits and pollute. Later, after the supply died down, permits became scarcer and more expensive and therefore actually had an influence.

3.

Yes, because it will allow only the best of the firms that are able to overcome this tax during a recession to prosper. It creates a survival of the fittest scenario that improves the industry.

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2. It failed to reduce carbon emissions over the first couple of years due to the overabundance of permits supplied by the government. There was demand for them, but the scarcity aspect of the price was not in play yet. It took a few years for the number of free permits to reduce in the market.

3. We should certainly worry about it during this time. There would never be a good time to begin taxing polluters. If we were in the middle of a golden age, people would complain that the government are going to end it prematurely, and if we were at a time further down the recovery road, people would complain that this will throw us back into a recession. In addition, without the environment, we don't have business. We kind of need to be alive in order for firms and their products to be at all useful to us. Also, it's a good idea to simply "kick people while they're down", because that way as firms attempt to recover, this is just another bump in the recovery road, so it has less psychological significance compared to if it were a new tax without any other problems going on.

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2. Europe's carbon emission permit market failed to reduce emissions over its first couple of years because the permits were not scarce enough to warrant reductions of carbon emissions of firms.

3. Making firms pay to pollute is a reasonable idea in the middle of a recession because the pollution will have long term spillover costs which must be addressed as soon as possible. Current hardships pale in comparison to some of the hardships that continued pollution and inaction could have on the environment.

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Europe's carbon emission permits were sold too cheaply for companies to be affected by them. This meant that they were so abundant that the price of each unit dropped to a level where companies did not feel the need to lower their CO2 output to avoid buying the permit. The result for the first couple of years was that European emissions kept on rising, until, since these permits are sold in a free market concept, the abundance slowly dried out. When this happened, the price of each permit increased, which made it more expensive for companies to pollute. The incentive then, was for new companies entering the "polluting" market to start up with clean energy and for the older ones to renovate their factories. This way they could all avoid the expensive permit. The result of this was a 4% drop in CO2 in Europe.

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Tradeable pollution permits are more politically viable than a direct tax on firms' carbon emissions because they do not represent stringent government measures. Firms still have the option of continuing production at high levels of pollution if they are willing and able to buy permits. This is a market solution to a negative externality,and is therefore better welcomed by the voting public, as taxes on firms also reduce consumer surplus.

2. Why did Europe’s carbon emission permit market fail to reduce emissions over its first couple of years of implementation?

Europe's carbon emission permit market failed to reduce emissions over its first couple of years of implementation because the supply of permits wasn't limited enough. With greater number of permits in the market, the economic value of each remained relatively low and enabled firms to continue producing at high levels of pollution with minimal additional cost.

3. Is making firms pay to pollute a good idea in the middle of a recession? Do you think that we should even be worrying about the environment when millions of people are losing their jobs and entire industries are struggling to survive?

I don't think that making firms pay to pollute is a good idea in the middle of a recession. Additional costs may force firms to lay off workers in the short run, increasing unemployment and thus negatively affecting national and international economies. Perhaps,if bail-out packages had conditions that firms must use some of the money to buy carbon permits, than perhaps carbon permits could still be a feasible solution to decreasing pollution levels.

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You make a very good point when saying that eventually, the recession will be over, but the environment will not be cured. Of course, someday, the economy will re-establish itself in its approapriate position; but if this involved destroying our natural surroundings, then what's the point? Even if the economic crisis might appear as terrible, the destruction of our planet is much more serious and much worse.

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The problem with taxes is that, as many others have other explained, they tend to create a negative and actually unwanted response from receivers; however, it is indeed a punishment, since pollution is nothing less than almost illegal behavior. But taxes are quite difficult to set, since the appropriate amount is not clear. In the other hand, tradeable pollution rights operate through the market via the price system, giving firms a profit incentive to decrease pollution.

2. Why did Europe’s carbon emission permit market fail to reduce emissions over its first couple of years of implementation?

This was due to the fact that a type of "permit inflation" occurred; there were too many permits on the market, making the prices fall low, making it very easy to obtain the necessary permits at very low price to pollute as much as necessary.

3. Is making firms pay to pollute a good idea in the middle of a recession? Do you think that we should even be worrying about the environment when millions of people are losing their jobs and entire industries are struggling to survive?

Of course. In my personal opinion, the most important has always been the environment, since, without it, nothing, absolutely nothing would be able to subsist. I strongly believe that a "recession" is no excuse for destroying our home planet, and sincerely cannot understand how most people nowadays are so thankless, close-minded, selfish and definitely stupid to place economic development above the survival of the earth… well, of course, because when the earth is finally annihilated due to their careless work, they will no longer be alive… so what's the point of worrying, if they won't be here anymore?

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Its actually true what you said aboutrmaceutical companies which should be allowed to get around the system or at least be able to buy the permits at a cheaper price, as this is an important market.

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The government issued numerous permits, therefore, these lost their value so fimrs bought more permits to lower the price and to pollute more again.

I believe that its correct for firm to pay for their pollution made to the environmentsince this is a radical permanent effect on earth. The recession will be solved eventually, everything will become worse.

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I loved your comment. I completely agree with you about taxes and about how ironic it is that people expect results, but are not willing to contribute. Do you think that this is a characteristic peculiar to the United States? Also, I agree with your statement about the necessity to concentrate on protecting the environment.

-Issa

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Tradeable pollution permits are more politically viable than a direct tax on firms' carbon emissions because the act more within the framework of free market economics. This makes them less alienating to more right wing sectors of society, whereas many people regard direct taxes as "Robin Hood" tactics.

2. Why did Europe’s carbon emission permit market fail to reduce emissions over its first couple of years of implementation?

Europe's carbon emission permit market failed to reduce emissions over its first couple of years of implementation because too many permits were introduced onto the market. The excess of supply in relation to demand made for low equilibrium prices. This meant that companies could obtain extra permits to pollute more relatively easily.

3. Is making firms pay to pollute a good idea in the middle of a recession? Do you think that we should even be worrying about the environment when millions of people are losing their jobs and entire industries are struggling to survive?

The environment is always an issue that should be regarded as top priority. Global warming won't wait until we are out of a recession to continue heating up the earth. In fact, it is threatening to put the world into more economic turmoil if it is not addressed aggressively and immediately. The loss of coastal areas is just one of the problems that is being created. Soon many island nation who rely on tourism will find themselves without land or industry. That doesn't bode well for anyone.

-Issa

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I think you thought well about the pharmaceutical companies that they should be allowed to get around the system or at least be able to buy the permits at a cheaper price, as this is an important market. But on the other side then I am sure it would be possible to argue about nearly any market that it is very important and if the production isn’t continued fully because the permits are to expensive the society will have lack of this product and so will have to ‘suffer’

Vica

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2. The government issued too many permits so these permits lost on value and so firms just bought more permits to the low price and so could pollute a lot again.

3. I think it is ok to make firms pay to pollute even thou we are in the middle of a recession. This is because we can’t just put all other problems to the side because we are in a recession. If we let the world continue to be polluted then it is going to take even longer and more money than if we try to get a little control over it now.

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