Economics class: Windfalls for heavy industry in EU carbon scheme are a moral hazard
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Market failure and government intervention
Click to read the article below and then answer the questions:
Watch this video and then explain how the EU’s Emissions Trading System (ETS) operates
The ETS works on a ‘cap and trade’ principle. Using a demand and supply diagram, analyse how the cap and trade ETS can reduce emissions over time
Define moral hazard
Outline the reasons why ‘windfalls for heavy industry in EU carbon scheme are a moral hazard.’
Gavin Clarke, Emmanuel College