‘Cap and Trade’ Emissions Policy

‘Cap and Trade’ is a commonly heard climate emission control policy, also known as Emissions Trading System (ETS).

The basic concept is:

Cap:

Limit the amount of pollution allowed to be excreted by companies.

Trade:

Allow companies that don’t reach their set limit to sell of their remaining pollution allowance for whatever over polluters will buy it for. (Likely just below penalty amounts).

This system allows governments to control total amounts of emissions put out by companies while rewarding lower emitting companies and penalizing higher emitters.

Ultimately governments would lower overall emission budgets, lowering emission allowances giving companies time to change their practices and get more sustainable energy practices.

The consensus seems this would have had a major impact in the US if implemented during the 1990s, but the George Bush Administration couldn’t get it passed through Congress.

Currently Cap and Trade systems are practiced in many countries around the world; notably China, Canada, Mexico, Australia and the European Union. The US has state and local Cap and Trade initiatives.

Cap and Trade alone, at this point of the climate problem, is no longer enough.