Deregulation of the fossil fuels/non-renewable energy resources industry is ofte

Question

Deregulation of the fossil fuels/non-renewable energy resources industry is often touted to be key driver of amplified production and consumption of non-renewable energy resources such as coal, oil, and natural gas.

Question 1: Could international trade policies such as the recent U.S. steel tariff also amplify production and consumption of coal? If yes or no, provide an explanation to support your position.

Question 2: Who are the potential beneficiaries of the steel tariff policy in the U.S. coal sector? List two and explain how each might benefit from the tariff. [4 points]

Question 3: What are the potential impacts of this policy on the environment? Discuss two impacts. [4 points]

Question 4: Should beneficiaries of the steel tariff be taxed to compensate for the potential environment impacts? If yes or no, provide an explanation to support your position.

Explanation / Answer

Deregulation of the fossil fuels/non-renewable energy resources industry is often touted to be key driver of amplified production and consumption of non-renewable energy resources such as coal, oil, and natural gas.

Question 1: Could international trade policies such as the recent U.S. steel tariff also amplify production and consumption of coal? If yes or no, provide an explanation to support your position.

Following is the impact of tariff on various stakeholders of an economy.

Domestic supply of steel in US wil increase as domestic producers will get additional price on their steel (World price+tariff).

US customers will be worse off as they will have to pay higher price for steel.

Domestic employment will increase due to increase in production. Also the US Govt. will get extra revenues after imposing tariff on imported steel.

To make steel 74 % coal is needed and when domestic suppliers will need to produce more steel they will use more coal and hence demand and supply of coal is likely to increase.

Question 2: Who are the potential beneficiaries of the steel tariff policy in the U.S. coal sector? List two and explain how each might benefit from the tariff. [4 points]

As discussed in question one US producers and govt. are beneficieries of tariiff as producers get higher pries and govt gets tariff revenue. Also potential employees benefit.

Question 3: What are the potential impacts of this policy on the environment? Discuss two impacts. [4 points]

It is clear that Steel making is poluuting industry. Also burning of coal produces green house gases and hence environmental degradation will happen. This industry is known as polluting industry. Extenal costs will increase as people living nearby will have to suffer from lung related diseases, Also water bodies may get polluted due to more release of harmful chemical water into streams by thses companies and hence aquatic life will come in danger.

Question 4: Should beneficiaries of the steel tariff be taxed to compensate for the potential environment impacts? If yes or no, provide an explanation to support your position.

Yes. It can be considered. Because import tariff can promote production in those domestic firms also which are not very effcient in production practices and are lijely to pollute more. Also, external cost should be compensated from them.

However, providing them incentives to implement pollution reducing machinery and capping carbon cemission will be better alternative.

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