The emissions trading scheme and government business relations Essay

Executive Summary”

The world today is challenged by drastic climate change which is threatening lively hood of all living things on the earth surface, in water and in the air. Governments have formulated policies which mitigate emission of poisonous gas. The policies recommend companies to Pay for the gas which they emit this has financial effect to the societies and businesses.

Issue Overview”

Developed countries are the one’s which are affected most because they have most industries. Emissions from such industries have depleted the Ozone layer, increase on temperature and water sources are destroyed while water reservoirs are polluted. These are the problems which the emission trade shall solve by managing poisonous gas emitted by companies. The high cost involved shall affect economies of Governments, businesses and the society.

Stakeholder Interests – Society”

The livelihood of the society is at stake due to green house effects which has been aggravated by the poisonous gas emissions which is of interest to the society to know what the government is doing to mitigate it. The society is expected to change from use of highly carbonated source of energy to low emissions technologies (Lomborg, B 2001). They are recommended to use electricity, and use of wind or sun as source of energy as opposed to Coal and petroleum products. This sudden change of source of energy is challenging and expensive the government which is encouraging change of source of energies is supposed to compensate the public but this has not been forthcoming.

The products and services costs are much higher because companies have loaded costs incurred in purchase of emission rights. Despite of that, the society is supporting implementation of emission trading scheme because they are the one who are threatened by the worsening climatic condition. The environment is being damaged by global warming and Ozone depletion due to gas emitted by companies. Although, the clause in the policy which intend to lower climate change by slowing the rising living standards, won’t be easily accepted, by developing or developed countries.

Stakeholder Interests – Business”

            Businesses were to spend more in operational costs because they shall have to purchase emissions rights from the governments or other companies which has not utilized all the rights sold to them. The cost incurred shall be passed on to the consumers in terms of hiked cost in their products / services (Azar, C & Schneider, SH 2003). Businesses will loss on income and wealth which they associate with payment of emissions rights which is introduced by emissions trading scheme, companies are demanding compensation by the governments for what they shall invest on as they reduce gas emitted by the governments are hesitating to compensate them in time due to large investments which are being done which are very expensive.

            Businesses are keen to emit less gas than the rights which they have paid for / allocated so that they could have excess which they sell the rights to other companies at a higher cost than they got it hence make profit (Pwc, 2007). This is a common trade among companies which emit less and more gas.

            It’s of concern to the companies because any company which uses energy must emit gas as a by product so chances of reducing it to zero are minimal. The companies are also at liberty on how to implement the policy despite of it being formulated by the governments. Therefore most companies opt for less costly methods to comply with the regulations. As a result of emission trading the businesses have formed groupings which they use to air their views / grievances in one voice to the governments which are the governing authorities in its implementations.

Stakeholder Interests – Government”

            Intergovernmental panels are in agreement that they shall reduce global emissions by 20% by 2020 and more than 60% by 2050 to avert the environmental challenges which are facing the world today and in the near future.  Governments are concerned of livelihoods of their citizens; the environmental situation has far reaching effects such as food insecurity due to prolonged draughts in most part of the world, global warming and skin diseases due to ultraviolet rays which are penetrating the Ozone layer (McLennan, M 2006). Researches done so far shows that the situation will getting worse and life threatening if they don’t act swiftly that’s the reason why they are formulating policies to moderate the problems.

The governments shall increase their revenue collection by sales / allocation of emission permits (Stern, N 2006). It’s the responsibility of the government to formulate emission trading policies, ensure they are implemented properly and research and improve on the policies to ensure that meet the ever changing industrial and the public operations which would jeopardize control of poisonous gases (Hatfield, DS 2007).  It’s also their duty to inform the citizens on agreed adaptation responses with regard to the policy to ensure that its citizens are well cautioned on any environmental threat.


Stern, N 2006, The Economics of Climate Change: The Stern Review, Cambridge University Press, Cambridge, UK.
Lomborg, B 2001, The Skeptical Environmentalist: Measuring the Real States of the World. Cambridge University Press, Cambridge, UK.
McLennan, M 2006, Impacts of a National Emissions Trading Scheme on Australia’s Electricity Markets, Available at;.

Hatfield, DS 2007, ‘The economic impacts of deep cuts to Australia’s greenhouse emissions’ Ecos vol. 134 no. 12. pp. 45-50
Azar, C ; Schneider, SH 2003, ‘Are the economic costs of stabilizing the atmosphere prohibitive?’ Climatic Change vol. 42 no 4, pp.73–80.
Pwc, 2007, Climate change: the potential taxation implications of a National Emissions, Available at