"Carbon Credits" and Environmental Economics

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    Most discussions in “Environmental Economics” surround the need to subsidize Alternative Energy Firms, “Invest” in Environmental-focused Non-Governmental Organizations, and “Carbon Credits”.

    I have heard of “Carbon Credits” described as a “pay to pollute” or a “Carbon Tax”?

    How exactly would this work?

    Won’t allowing the buying,selling, and trading of “Carbon Credits” create a new Asset Class that Firms can use to leverage themselves.

    I am thinking of a scenario where a company buy 100 units of Carbon Credits. The EPA determines that they did 100 units of pollution. The Company can then avoid paying out a Class Action Lawsuit by claiming to be “Carbon Neutral” or a “Non Polluter”.

    Could this turn Carbon Credits into “Polluter’s Insurance”?

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