Climate Change in the U.S.: The Problem and Policy Development (Research Paper Sample)

Climate Change in the U.S.: The Problem and Policy Development
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Climate Change in the U.S.: The Problem and Policy Development
Introduction
Recent evaluations by the World Meteorological Organization and the UNEP (United Nations Environmental Program) have highlighted the need for a comprehensive approach in curbing the risks arising out of the phenomenon of climate change. Increase in cases of extreme weather events is already inflicting heavy costs not only on the United States but on other global economies, as well. New regulations and policy programs can have a significant impact on the rate at which climate change occurs. Several solutions have been suggested. Over the coming years, the cost of climate change policy in the United States will most likely be equivalent to the overall cost of existent environmental regulations. To circumvent the higher costs, policy programs should be designed to create incentives for individuals and firms to pursue the least costly options for mitigating climate over time (Dinan & United States Congressional Office, 2008, p. 1). The implementation of these options should be across national borders and among all the relevant sectors. Properly designed policies for the mitigation of greenhouse gas emission can act as a sound foundation for global efforts. It can also serve as an example for developing and emerging countries.
Analysis of the Problem
The phrase “climate change” describes the changes in world’s weather patterns, including rainfall, temperature, and extreme weather conditions brought about by global warming. Greenhouse gases (GHG), for instance carbon dioxide, accumulate in the atmosphere and form an obstruction that prevents excess heat from easily escaping. Human activities such as the burning of fossil fuels and deforestation have increased the concentration of atmospheric GHG, thereby increasing the greenhouse effect (Gaan, 2008, p. 42). This increased greenhouse effect in turn leads to climate change and global warming. All over the world, there is an escalation of interest in designing and enforcing obligatory, domestic, market-based policies to tackle climate change. In the United States, momentum continues to develop for federal action. Events at the regional and state level, including New England, California, and the Mid-Atlantic States, strengthen this effort through initiating their own call for compulsory and binding policies. Some states are more interested in carbon credit while others prefer the cap and trade policy.
Designing of a domestic policy for climate change has significant fiscal, economic, energy, and environmental implications (Parry, Mooij, Keen & International Monetary Fund, 2012, p. 19). The mitigation of greenhouse gas (GHG) emissions plays a critical role in addressing an issue that is considered as the most critical environmental predicament of the 21st century. In the long term, policies for tackling climate change will affect more households and firms and impose steeper costs and bigger benefits compared to any environmental policy presently in operation. The cost of implementing domestic GHG mitigation policy, which is between one and two percent of the national income, could be approximately equal to the other environmental policies put together. Market-based climate change approaches present an opportunity for governments to generate revenues that are equivalent to the other established streams of revenue, including corporate income tax (Organization for Economic Co-operation and Development, 2009, p. 96). Given the potential for such extensive effects, it is imperative to take into account several vital questions in coming up with an evaluation of the cap-and-trade proposal.
These questions include whether this proposal encourages efficiency by tackling climate change in a way that is responsive to costs and benefits and if it will employ cost-effective implementation in achieving its declared emission reduction goals using the least resources possible. Another important question is how this policy will affect the distribution of costs and benefits across the United States economy. The problem of global change is momentous and requires a concerted effort between government agencies and the private or not-for-profit sectors (Gerrard & American Bar Association, 2007, p. 292). For instance, in reducing greenhouse gas emissions, the government can team up with the private sector in the provision of a cleaner, low carbon energy that benefits both the planet and humans.
To ensure future prosperity, there is a need to invest in a low-carbon, high-growth economy. Towards this end, there is an urgent need for policies and incentives to assist in removing the barriers to increased carbon finance and technology. Such policies and incentives will make green recovery programs have the greatest effect. However, this task cannot be left to governments alone. The private sector, as a principal agent for delivering low-carbon innovation, investment, products and services, needs to have some voice at the table.
Description of the Policy
With the cap-and-trade policy, a regulatory body such as the federal government establishes a cap on the discharge of a specific pollutant, such as carbon dioxide, for a selected group of polluters, which may include power plants and huge industrial facilities (Helm & Hepburn, 2009, p. 219). The total amount of emissions permitted under the cap is separated into individual permits. Each permit constitutes the right to discharge a predetermined amount of the pollutant (for instance, one ton of carbon dioxide). These permits are then distributed to the sources subscribed to the program. There are several methods of allocation, including an auction, free distribution to the capped parties, or some blend of the two methods (Dryzek, Norgaard & Schlosberg, 2011, p. 523). At the conclusion of the compliance period (for example one year), every regulated party must give a detailed report of all emissions and submit a corresponding number of permits, which are then retired from the system. The cap restricts the number of permits, which means that these permits have monetary value and can be traded.
The companies that manage to cut their emissions in a less costly manner can trade their extra permits those for whom the emissions reduction cost is prohibitive. Each company is free to select the method of meeting its emission target. However, market incentives motivate businesses and organizations to employ conservation measures or invest in novel technologies to cut the cost of lowering emissions (Carlarne, 2010, p. 40). With time, the emission cap is made more stringent to attain more stringent pollution-reduction target, which requires businesses to adjust their strategies in complying with the new emission levels.
An Example of Cap-and-Trade Policy
The Acid Rain Program, which came into force under the Clean Air Act Amendments of 1990, was the most productive cup-and-trade system. It established a permanent cap (limit) on the amount of sulfur dioxide that power plants across the United States could emit. At the anticipated height of implementation in 2010, after the imposition of progressively rigorous, the program was anticipated to have trimmed the annual sulfur dioxide emissions by half the quantities emitted in 1980 (Bryner & Duffy, 2012, p. 62). The regulated sources such as electric power plants were allocated permits (allowances) based on past fuel consumption and emission levels prior to the introduction of the program. By the close of the year, each source must have enough permits to cater for its emissions for that year. The allowances or permits must correspond to its emissions and are subtracted from compliance account of the utility. They are then withdrawn from the system. Sources with surplus permits can sell or bank them for sale or use in the future. Emission trading the sources with the versatility to devise its own compliance policy. Supervision, monitoring, and the enforcement of severe penalties encourage compliance.
Discussion of Policy Implementation
The designing of an efficient and successful cap-and-trade program to trim down GHG emissions is a lot more intricate and difficult compared to the Acid Rain Program. This is because the Acid Rain Program dealt with one sector namely the electric power plants, which were the principal of sulfur dioxide emissions. On the other hand, the principal sources carbon dioxide and other GHG are many. They include agriculture, residential and commercial sectors, industry, transportation, and electric power plants (Gayer & Horowitz, 2006, p. 53). Important issues for policymakers involve deciding which greenhouse gases and sources of emissions to incorporate and the point in the supply chain of fossil fuel at which regulation will be undertaken. This gives rise to four variants or sub-options of the cap-and-trade policy, which are the upstream program, the downstream program, the upstream/downstream cap-and-trade, and the sectoral hybrid program (Wold, Hunter, & Powers, 2009, p. 906).
The implementation of an upstream program occurs at the point where carbon enters the economy. This requires the importers and producers of fossil fuels to present permits or allowances equivalent to the carbon emissions discharged through the burning of their fuels. The cost of the permits is then passed to the consumers. The higher prices that result encourage the adoption of energy and fuel-saving practices and technologies. An upstream program is capable of covering nearly all fossil-based emissions while ensuring that administrative costs remain low (Wold, Hunter, & Powers, 2009, p. 906). This is because only a comparatively small number of businesses need regulation. On the other hand, the implementation of a downstream pro...