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Cap And Trade

Laws and Money: Ending the Free Ride for Carbon Emissions

cash.jpg “Personal choices, no matter how virtuous, cannot do enough. It will also take laws and money.”

The New Yorker has published an illuminating article on carbon emissions and carbon “cap and trade” systems, which shares the example of the successful reduction in sulfur emissions to illustrate how carbon emissions could be reduced. The passage of the Clean Air Act in 1990 mandated massive acid-rain reductions, and created a market for sulfur-dioxide emissions that forced companies to “pay to pollute”. Once a cost was associated with sulfur-dioxide emissions, companies could save money by installing scrubbers. Emissions were reduced from eighteen million tons to nine million, and acid rain evaporated as an environmental problem. Cap and trade is already happening, at the Chicago Climate Exchange (CCX), where carbon futures are traded like pork bellies.

“…CCX members buy and sell the right to pollute. Each makes a voluntary (but legally binding) commitment to reduce emissions of greenhouse gases—including carbon dioxide, methane, and nitrous oxide—and hydrofluorocarbons. Four hundred corporations now belong to the exchange, including a growing percentage of America’s largest manufacturers. The members agree to reduce their emissions by a certain amount every year, a system commonly known as cap and trade. A baseline target, or cap, is established, and companies whose emissions fall below that cap receive allowances, which they can sell (or save to use later). Companies whose emissions exceed the limit are essentially fined and forced to buy credits to compensate for their excess.” — Michael Specter, The New Yorker

This isn’t just a method for punishment and reward. Establishing a carbon market allows money to flow toward developing the new energy technologies that will help companies save money. And if Silicon Valley is ever going to become “Solar Valley”, as some have predicted, the money needs to flow. Obama, Clinton and McCain are all advocating a cap and trade system.

See Also:

sustainablog: “Morality and Markets: The Depths of our Carbon Footprints”


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Written By

Carol Gulyas is a leader in the renewable energy community in Illinois, where she serves as VP of the Board of the Illinois Solar Energy Association. Recently she co-founded EcoAchievers -- a provider of online education for the renewable energy and sustainable living community. She spent 18 years in the direct marketing industry in New York and Chicago, and is currently a teaching librarian at Columbia College Chicago. Carol grew up in a small town in central Indiana, then lived in the Pacific Northwest, Lima, Peru, and New York City. She is inspired by reducing energy consumption through the use of renewable energy, energy efficiency, and green building technology.

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