Tradable Pollution Permits


	Tradable Pollution Permits
	Advantages Government can raise funds by selling their reserve pollution permits. The revenue can be used to clean up the environment. Firms have an incentive to invest in clean technology Firms are able to bank their excess permits for future use	Disadvantages The EU is only one part of the world, unless all countries engage in similar carbon trading schemes, global emissions will continue to increase. Price fluctuate, making it hard for firms to plan for the future. Prices need to be more stable. Firms may pass the cost of purchasing pollution permits on to their customers leading to higher prices.
	Evaluation

Government can raise funds by selling their reserve pollution permits. The revenue can be used to clean up the environment.
Firms have an incentive to invest in clean technology
Firms are able to bank their excess permits for future use

The EU is only one part of the world, unless all countries engage in similar carbon trading schemes, global emissions will continue to increase.
Price fluctuate, making it hard for firms to plan for the future. Prices need to be more stable.
Firms may pass the cost of purchasing pollution permits on to their customers leading to higher prices.

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