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Financial Greenhouse Gas Reduction Incentives

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Financial greenhouse gas (GHG) reduction incentives are added costs for products that require the emission of GHG to produce and/or use. These costs are proportional to the amount of GHG emitted in the production and/or use of each unit of the product, and these costs (basically fees) slowly increase over time. The incentive part comes from lower net costs for products that emit less GHG, which make the consumer more likely to purchase the lower-cost product.

There are basically two systems for implementing the fees associated with the title incentives: Cap and Trade, as used by California and a group of Northeastern States, and a greenhouse gas tax (a.k.a. Carbon Fee and Dividend System), as being considered in the U.S. Congress.

This paper will look at the differences between these two incentive systems, the carbon fee and dividend bills being considered by Congress, and some added information on the two Cap and Trade Systems.

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John Benson's picture

Thank John for the Post!

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Matt Chester's picture
Matt Chester on Feb 4, 2020 5:19 pm GMT

Great piece, John-- it always seems like a financial incentive of some sort will be necessary, as people simply aren't going to decarbonize just because it may be the 'right' thing to do, but you really show how the decision to provide a financial incentive is really just scratching the surface and there are so many different directions to go with it, each with their own benefits, faults, supporters, detractors, etc. 

John Benson's picture
John Benson on Feb 4, 2020 7:12 pm GMT

Thanks for the response, Matt.


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