A general overview on carbon tax and carbon trading describing it's mechanism and advantages and disadvantages. A summarization of their effects on economy and environment remarking the conclusion

1. Presentation Topic:
Carbon Tax
and
Carbon Trading
Presented By: Jannat Binte Jalal (MS124F) & Rahima Akter (MS 111F)
Course Name: Environmental
Resource Economics (ESDM-
5102)

2. Introduction
 Climate change is the greatest threat facing
humanity today.
Greenhouse gas emission
Economic and Environmental Threats
Human health risk
Reduced agricultural productivity
Ecosystem degradation
 Introducing carbon taxes and trading as a mean to
combat environmental pollution and mitigate
climate change.
2

3. What is Carbon Trading
• Carbon Trading: Carbon
trading is the process of buying
and selling permits and credits
that allow the permit holder to
emit carbon dioxide.
• But what is Carbon Credit
?
International Emission Trading
Clean Development Mechanism
Joint Implementation
3

4. The cap on greenhouse gas
emissions that drive global warming
is a firm limit on pollution. The cap
gets stricter over time.
Trading gives companies a strong
incentive to save money by cutting
emissions in the most cost-effective
ways.
How Does it work
4

5. Pros and Cons of Carbon Trading
 Enter his/her hobby here.
Reduction in Greenhouse
Gas Emission
Source of Revenue for
Developing Nations
Support a Free Market
System
Alternative Sources of Energy
or Green Technology
Companies Can Improve
their Public Image
Right to Pollute and
Corruption
High Administrative and
Certification Cost
Some Companies may go
out of Business
Slow process and not
applicable in all sector
Difficult to set targets and
Unsustainable practices
5

6. Impact on Economy
•Employment, Revenue, Compensation for poor community, Health Savings, Tax
Reform
•The carbon intensity of California’s economy has fallen 33% since it peaked in
2001, while during the same period the state’s economy has grown by 37%.
•In the period 1990-2016, EU GDP grew by 53%, while total GHG emissions
decreased by 23%.
Impact on Environment
Energy Security
Cleaner Air
Emission Reduction
Public Health
Resource Efficiency
Carbon Trading - - An Economic Instrument
6

7. 7

8. 1. IIDFC
(first local Financial Institute, entered
into Carbon Trading through signing
Certified Emission Reduction
PurchaseAgreement (CERPA) with
the World Bank & the Government o
Denmark on 25thAugust, 2009)
 Carbon Trading & Bangladesh
8
Bangladesh has emitted only 0.3%
and its yearly emission is 46527
thousand per metric ton (Middle-East
Journal of Scientific Research 24 (8):
2624-2631, 2016)
No gain from carbon trading, as its
emission contributes only 16% of
total world’s carbon emission.
Its industrial development can be
hampered
No Revenue
IDCOL is a public financial
institution specializing in the
financing of infrastructure and
renewable energy projects, and
developing its intervention into
new green segments.

9. 9
Carbon Tax
The carbon tax can be regarded as the price for one unit of
carbon that is emitted into our atmosphere
It is a form of carbon pricing and aims to reduce global carbon
emissions in order to mitigate the global warming issue.

10. 10
Purpose of Carbon Tax
The purpose of a carbon tax is to internalize this externality.
 What this means is that the final price of the good should include the
external costs and not just the private cost.
 It is similar to the ‘polluter pays principle.‘ – which was incorporated
into international law at the 1992 Rio Summit.
 It simply means those who cause environmental costs should be made
to pay the full social cost of their actions.

11. 11
Advantages
 Higher incentive for people to
avoid the use of fossil fuels
Companies have an incentive to
go green as well
Pressure for a faster energy
transition process increases
People will adjust their
consumption behavior
.Effective measure to mitigate
global warming
Companies may relocate their
headquarters to other countries
Discussions regarding the use of the
carbon tax revenue
Many products may become more
expensive
Some companies may go out of business
May hurt low-income and middle-class
families
Firms may hide their true level of CO2-
emissions
Disadvantages

12. 12
Carbon tax effects on the GDP
As shown in Figure, the GDP will be reduced
by imposing carbon tax.
The reason for the GDP reduction is the
increase in the energy carriers price relative to
the basic price, and thereby
 when the household incomes remain constant
or increase lower than the rate of increase in the
prices of energy carriers and consumer goods,
 this will reduce demand and consumption of
public goods and, consequently, reduce the
GDP

13. 13
How Would a Carbon Tax Affect the Environment
Clean Energy Innovation and Infrastructure
Reducing the pollution level
Strict Emission Regulation
U.S. efforts to decrease emissions would produce incremental
benefits, in the form of incremental reductions in the expected
damage from climate change

14. Carbon pricing initiatives are spreading throughout the world.
However, the practical policy implementation of an emissions trading system
needs to be designed in a way that fits with local contexts and integrates with
other policy priorities in each jurisdiction.
Conclusion
14