What is cap and trade you may ask?
“The goal of cap and trade is to steadily reduce carbon dioxide and other greenhouse gas emissions economy-wide in a cost-effective manner”(Center for American Progress). The cap and trade part of this is each a separate piece of the profit. The cap is the large-scale emitter or the actual company that has a limit on the amount of greenhouse gas that it can emit. Think of a cap like a limit or glass ceiling that a company has on the amount of greenhouse gas. “These permits se an enforceable limit, or cap on the amount of greenhouse gas pollution that the company is allowed to emit. Over time, the limits become stricter, allowing less and less pollution, until the ultimate reduction goal is met”(Center for American Progress).
The trade has a different process than the cap. The trade is how the some companies reduce their emissions below their required limit. Think of trade as in trade off, with the emissions that they don’t need. ” These more efficient companies, who emit less than their allowance, can sell their extra permits to companies that are not able to make reductions as easily”(Center for American Progress).
“The government can choose to ‘grandfather’ allowances to polluting firms in proportion to historical emissions or auction those permits to companies”(Cap and Trade, Climatelab.org). According to cilmatlab.org while there is a consensus in this scientific community that the increasing CO2 emissions are destabilizing the global climate patterns and the threat of ecosystems, there is a lot of discussion about what approaches should be taken to reduce emissions. The carbon cap and trade is a solid approach to reducing these emissions.
“Cap and trade is an environmental policy tool that delivers results with a mandatory cap on emissions while providing sources flexibility in how they comply”(Cap and trade, epa.gov). The success of the cap and trade determines how the reward and efficiency is based on. Some examples of successful cap and trade according to EPA.gov are the nationwide Acid Rain Program, and the regional NOx Budget Trading Program in the Northeast. Additionally, the EPA has issued the clean air interstate rule to build on the success of these programs.
Some scientists and environmentalists believe that “carbon taxes will lend predictability to energy prices, whereas cap-and-trade system will aggravate the price volatility that historically has discouraged investments in less carbon-intensive electricity generation, carbon-reducing energy efficiency and carbon-replacing renewable energy”(crabontax.org).
“Cap and Trade 101.” Center for American Progress. Web. 10 Mar. 2012. <http://www.americanprogress.org/issues/2008/01/capandtrade101.html>.
“Cap and Trade.” EPA. Environmental Protection Agency, 12 Aug. 2010. Web. 10 Mar. 2012. <http://www.epa.gov/capandtrade/>.
“Carbon Tax Center.” » Vs. Cap-Trade. Web. 10 Mar. 2012. <http://www.carbontax.org/issues/carbon-taxes-vs-cap-and-trade/>.