| Emission Reduction | ECON220-1301A-06 | | Ashley Baker | 3/10/2013 |

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The two policies that I chose that could be used to reduce the total amount of emissions are Cap and Trade, and a Carbon Tax. They both “create incentives for businesses and households to conserve energy, improve energy efficiency, and adopt clean-energy technologies” (Policy Basics, 2013). “The Cap and Trade policy specifies the amount of allowable emissions” (Policy Basics, 2013). “A Carbon Tax is the obverse of Cap and Trade: rather than fixing the amount of allowable emissions, it specifies their price” (Policy Basics, 2013). I believe that the Cap and Trade policy would work not only because it creates incentives for businesses and households, but it also gives you a certain amount that is allowed. I also think that a Carbon Tax would work because if you were to go over the price that was given you would be charged extra, and no one wants to pay more than what they use. A Carbon Tax also creates incentives for businesses and households. There are many benefits for each of the policies, but I am going to share two for each of them because I feel that they are the most important ones. The two benefits for the Cap and Trade policy are that it “provides a cost-effective way for the U.S. to adjust to a more sustainable use of energy” (Earl, 2009), and that “it motivates other countries to join the emission reduction commitments” (Earl, 2009). The benefits of a Carbon Tax are that it “replaces command-and-control regulations and expensive subsidies with transparent and powerful market-based incentives” (Morris, 2013), and that it “promotes economic activity through reduced regulatory burden and lower marginal tax rates” (Morris, 2013). There will be no cost for either the Cap and Trade or a Carbon Tax. “Jim Sims says that the question of how much will it cost is absolutely imperative for policymakers to answer” (Carey, 2010). We think that everything has a cost but in reality not everything does, a policymaker cannot make you pay for one of their