Cap-and-trade vs. Carbon Taxes

January 9, 2009
By Steve Coll

Think Tank

On January 8, 2009, Chairman and chief executive of ExxonMobil Corp., Rex W. Tillerson delivered a speech in Washington concerning the carbon taxes which could reduce the emissions of carbon. He believe that a carbon tax of 20 dollars per ton is a better way to address global warming than the cap-and-trade system currently being discussed by the Obama administration. Many large corporations are changing their opposition to climate change accusations and hope to influence the policies and mechanisms which will be decided by Congress. ExxonMobil has in the past funded global warming skeptics, but has come a long way to change that. Its new proposal is credible and proposes a real plan to change the emission levels over the next decade. Last year, the Congress considered a bill regarding cap-and- trade policies, but rejected it due to its complexity. The basic idea behind cap-and-trade bills is to regulate carbon emissions by creating a regulated marketplace in which polluting firms can buy and sell emissions while joining aggregate caps. It could offer an enforceable total-emission target. On the other hand, the system would become very complex and difficult to administer as well as subject to abuses. There are also different views on Europe's experiment with cap-and-trade bills.