Carbon Emission: Markets Vs Regulations

With the severity of global warming, an increasing number of people come to realize that environmental protection is of vital importance and adopt market and regulatory approaches to reduce carbon emissions thereof. People in favor of market approach reckon that it will offer an ongoing incentive for companies to stay involved and achieve positive results rather than suffering from ineffectual government bureaucracy, while those who encourage regulatory method deem that regulations are more stable and effective than market mechanism. From my perspective, regulatory approach is much better than the market one.

The regulatory approach manifests government resolution to curb carbon emissions, which will not only overcome the weakness of market mechanisms, but also guide the public to behave well. First of all, regulations can be more targeted in order to deal with the formidable problems first. For example, government policy can not only require vehicle exhausts to become much less harmful to the environment over the past years, but also demand companies to update their equipment and working methods, which the market alone would not provide. Secondly, regulatory approach as an effective management tool with a means of reward and punishment, which is easier to introduce than market mechanisms. Companies and individuals who respond actively to efficiency standards would like to receive certain allowances from the authority; otherwise they would face a tax burden or even a fine. To some extent, regulations force those really responsible for carbon emissions, like power generators and fuel industry, to face up to their responsibilities and to invest in green technology. Besides, regulatory approach is more feasible as the existing global marketplace is quite imperfect. Many developing countries nowadays lack the open economies for market mechanism to operate effectively. Until their economies are sufficiently reformed, regulations will still remain the main method of carbon emission reductions in such places. Above all, the validity of governmental regulations outweighs the market-based solutions.