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Cap and trade to deal with carbon emission conundrum
Even the popular carbon tax scheme still has "loopholes" that allow polluters to emit as much as they can afford to pay in terms of carbon taxes.
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Unhealthy air: Haze resulting from air pollution blankets the Jakarta skyline on Aug. 23. Thousands of public employees in the capital were told to start working from home on Aug. 21, 2023 in a two-month trial aimed at improving the city's air quality. (AFP/Yasuyoshi Chiba)
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iscussions about greenhouse gas (GHG) emissions have been heating up, especially after the world experienced its hottest month in July of this year. People are becoming increasingly aware that the Earth is in a bad state.
For people in Greater Jakarta the impact of carbon emissions is present and dangerous. The Swiss company IQAir recently found that Jakarta’s air quality was the worst in the world, which is unsurprising as the Indonesian capital has been infamous for its polluted air over the last few decades.
Various proposed solutions to mitigate or at least alleviate the negative impacts of carbon emissions have been proposed. These range from carbon taxation and reinstatement of hybrid work systems to encouraging a shift from combustion engines to electric vehicles.
Introducing these diverse solutions signifies a step forward, as we are beginning to realize the importance of safeguarding the environment for a habitable future. Among the array of proposals, the "cap and trade" solution is rarely brought to the surface, despite its potential to be a suitable option to address Indonesia's current situation.
Simply put, cap and trade is a scheme where the government sets a limit (cap) on the amount of carbon emissions permitted to be released into the air. At the same time, companies hold an allowance to emit pollutants, which can be traded if pollution allowances are available. Cap and trade is not a new scheme. Decades ago, the United States created its first cap-and-trade program in Title IV of the Clean Air Act Amendments of 1990 to regulate sulfur dioxide emissions through allowances. In California, the United States, this scheme consistently reduced overall GHG emissions by 3 percent per year from 2015 to 2020 and is projected to achieve 5 percent annually until 2030, according to the Center for Climate and Energy Solutions.
There are several reasons why cap and trade could be a suitable alternative solution to address pollution issues in Indonesia.
First is that the cap and trade scheme offers more flexibility for industries. In a certain period, industries might produce less than usual, resulting in surplus pollution allowances. These allowances could be reallocated to industries that require excess production in the same period.
