The Kyoto protocol, drafted in December 1997, calls for each developed country t

Question

The Kyoto protocol, drafted in December 1997, calls for each developed country to cut its emissions of carbon dioxide by the year 2012 to approximately 8% below 1990 levels. Some countries are concerned about the cost of making such a cut in carbon emissions. Expectations are that the cost of pollution will be $5-10 per ton of carbon emitted. However, there really is a great deal of uncertainty about what the costs might be; some say it will be easy to reduce carbon emissions, others say it will be very expensive. In one developed country, two proposals are being considered to achieve the reduction. Proposal A involves the issuance of permits for carbon emissions each year, with the number of permits equaling the targeted 8% less than 1990 emissions. Each permit will be good for emitting one ton of carbon. Proposal B is the same as proposal A except that the government agrees to sell an unlimited number of the price of permits for $10 each. Explain how each of these proposals works and what the price of permits might end up being under each proposal. Discuss the pros and cons of each proposal.

Explanation / Answer

the kyoto protocol is a international treaty which is proposed by the UN which is related to the reduction of the carbon emission. here are two proposals for the reduction of carbon emission. according to the proposal A refers that issuing a permits for the carbon reduction. and the no of permit is equal to the the targeted 8% less than 1990 emissions. but we know that carbon reduction means the loss of money because the most of part of carbon emission is comes from the industries which will be not in the favour of these permits. but if we accept the proposal B which is same to the proposal A except government agrees to sell an unlimited number of the price of permits for $10 each because than it will be economically beneficial for the industries or another carbon producer sources because they dont have a loss of money but by this step economy of country wil go down because this process required the lot of money which country cannt afford. there is a another way if gov fix the price of permits from $2 to $4 or $5 , then its possible because loss of money of gove get downwhich is affordable.

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