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Externalities resulting from industrial activities lead to climate change which has negative impacts on the economy of a country, for instance, floods occur as a result of climate change leading to loss of human settlement and destruction of infrastructure among other things. These results in the decline of the economy of a country, but this can be reduced by reduction of the amount of gases and particulates released to the environment. In as much as industries should continue in the production goods, they should take into consideration the effects they cause to the environment.
Unit Taxation policy
Firstly, there is need to introduce of tax payment system for every unit of fuel produced. High production of fossil fuel leads to a high level of gases and particulates in the environment, which eventually leads to externalities. Introduction of unit taxation system is essential because all the producers that deal with fossil fuel production will have to lower the amount of raw material consumed hence lowering the amount of gases and particulates that are released to the environment. This method can work because fuel energy is vital in the day-to-day running of many countries economy.
Secondly, in addition to emission reduction unit taxation policy is relevant in the raising of revenue of a country. The revenue results from the tax unit policies that are imperative in the development of a nation. Whenever producing countries tax more for the petroleum produced it gets more income than the consuming country (Strand, 2008). The income generated helps in the economic growth of a country for example; a country will be able to develop efficient transport system.
Apart from the benefits derived from unit taxation system, it also has negative implications. Due to high production cost production of fossil fuel products will decline because there will be less demand on fossil fuel products, which will eventually lead to a decline in the country's economy.
On the other hand, the projected benefits of the future are more than the present generation because the amount of carbon emission that is produced is less (Strand, 2008). For instance, there will be advancement in technology leading to high revenue generation from products facilitating inventions such as electric driven vehicles and trains.
The decision on the best level of emission reduction can be reached after determining the consequence of the policy. For instance, how the externalities resulting from emission of carbon and how they have been counteracted and how is it relevant in the production of revenue to the consuming parties (strand, 2008). This is relevant because it helps in determining how relevant the policy is versus other potential policies.
Carbon Capture and Storage Policy
The introduction of Carbon Capture and Storage Policy is particularly relevant in the efforts to reduce the externalities resulting from emission of green house gas in the atmosphere leading to climate change. The method derives its relevance from the fact that it does not lead to reduction in the amount of fossil fuel that is consumed compared to other means like payment of property rights for pollution of the environment (Fabozz, 2008). Moreover, Carbon Capture and Storage is very relevant in countries that produce large amount of carbon emission to the environment. In addition, modern technologies are not efficiently developed to reduce emission released to the environment; hence it can be used as a bridge technology (Mag & Senk, 2010). In view of the fact that it is readily developed, it will be significant if it is put into practice.
Besides reduction of the amount of carbon emission to the environment, Carbon Capture and Storage has other benefits like increased production of fossil fuel products. This directly implies that an increase in the amount of revenue to the producing country, since the country will export the product to other countries consequently earning foreign exchange. Exporting countries will decide on the appropriate method they can use so that they have high income for example increasing tax on the fossil fuel products (Strand, 2008).
Nonetheless, Carbon Capture and Storage has several implications because it consumes large quantities of energy and it is also likely to reduce the effectiveness of coal plants which ranges from 40- 45% to 30-35% this will have an implication on the 10-15% units of supplementary fuel required to produce equivalent amounts of energy (Mag & Senk, 2010).
Assessment of the best method of emission reduction can be reached upon after considering several factors such as how relevant is the technology and also if there are other optional technologies that are more relevant than Carbon Capture and Storage. Carbon Capture and Storage is very vital in countries that have loads of coal fired plant for instance Germany, China and USA (Mag & Senk, 2010).
In a nutshell, the unit taxation system and Carbon Capture and Storage are very relevant in the measure that can help a country reduce the amount of emissions that are released to the environment. The two policies if properly instituted will help a country lower the amount of emissions released to the environment and at the same time improve the economy.