Carbon emissions, most notably carbon dioxide (CO2), are part of a collection of gases that negatively influence the quality of our air and increase the greenhouse effect. Greenhouse gases have a direct influence on the environment, causing extreme weather changes, a global temperature increase, the loss of ecosystems and potentially hazardous health effects for people.
Some have sought ways to regulate carbon emissions through federal government mandates. There are two prevailing schools of thought regarding governmental control of carbon emissions. The first, a carbon tax, is exactly what it sounds like -- taxing companies directly, based on the amount of carbon they put into the atmosphere. The goal of a carbon tax would be to convince businesses and other organizations to reduce their total emissions.
The second governmental control approach that has been under study in recent years is referred to as cap-and-trade legislation. In this system, the government sets a "cap" on the maximum amount of emissions it will allow. From here, it then auctions off emissions allowances to companies until it reaches that cap. Companies that cannot cover their emissions with their allowances are forced to either reduce their totals or buy allowances from other companies. This system is designed to promote stricter emissions standards without directly taxing companies. It does have some potential problems, however. As the carbon cap grows more stringent over time under plans that have been discussed, companies may have to buy special permits at high prices, a cost that would likely be passed along to consumers. Also, the program could have a negative impact on the overall economy: As utility rates go up, as well as rates of anything that uses energy in its production, the fear is consumers will tighten their wallets, which could lead to cutbacks in production, consumer spending and jobs [source: Wall Street Journal].
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