Carbon Emission HW Question (Check My Graph)?

Question

Kyoto attempts to reduce the likelihood of global warming from excessive greenhouse gas emissions. Under the Kyoto Protocol, many developed countries (such as Russia, the United Kingdom, and Japan) made specific commitments to reduce carbon dioxide emissions. The Protocol refers to these countries as Annex I countries.

Under the emissions trading program described in the NPR story, each Annex I country receives emissions permits, or credits, to distribute to carbon-emitting firms in its economy. Each credit allows the holder to emit 1 ton of carbon dioxide during the year. If, at the end of the year, a firm has emitted more pollution than its credits allow, it pays a large fine. If a firm needs to emit more pollution than its permits allow, the firm can buy the additional credits it needs from a firm that does not need all of its pollution credits.

(Keep Reading into next post)

Answer 1

What a crock. Another genius government method to collect taxes and fees.

Answer 2

This happens to be an Aplia question from an assignment I use in my microeconomics class.

When the US agrees to participate in the Kyoto Protocol, 2 things happen

1. We have a larger demand for carbon credits (since we have US firms now needing them in order to emit carbon gases).

2. We have more carbon credits that have been given to the US to distribute to the firms within the US.

#1 will increase the demand for carbon permits

#2 will increase the supply of carbon permits.

You shift the demand and supply curves accordingly (I am hoping you know which direction is an increase.  LOL)

Good luck with your homework!!