Cap And Trade

Published on October 24th, 2009 | by Susan Kraemer

23

How You Can End Climate Change by Buying Pollution Permits on the Cap and Trade Market

October 24th, 2009 by  

Here’s a revolutionary plan from Sandbag that enables you and me to end carbon emissions by simply buying up and destroying European pollution permits by retiring them off the market, at $40 per permit or ton of CO2.

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Sandbag buys up carbon credits from those who have already made energy efficiency  investments and as a result have cut their pollution to below their previous level. We buy these clean companies’ credits through Sandbag, and then destroy them so dirty companies can’t buy them.

Under the EU Emissions Trading Scheme in Europe set up to meet Kyoto goals, big carbon pollution plants must buy permits to emit carbon dioxide, up to a limit or “cap”.

The Europeans set up their plan so that individuals could also buy these and trade them also. Americans can buy them too, through Sandbag.

When we buy these, this gets the permits out of the “trade” market; which has the effect of further tightening the “cap” or limit on emissions. The more of us buy permits, the more expensive it becomes to pollute and then cleaner ways of doing things will receive more investment.

Once polluting companies cannot buy more permits to pollute, they are forced to invest in making their operation less polluting.  They can add renewable energy or efficiency measures.

Although these cap and trade rules affect mostly the largest polluters; oil and coal businesses, to a lessor extent they also push lessor polluters like cement companies and paper mills towards energy efficiency measures.

Under the energy legislation in the Senate now, the Clean Energy Jobs & American Power Act or CEJAPA pollution reduction investment will be incentivized by the same “capping” of emissions and “trading” of permits as in Europe.

Image: Steve Jurvetson

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About the Author

writes at CleanTechnica, CSP-Today and Renewable Energy World.  She has also been published at Wind Energy Update, Solar Plaza, Earthtechling PV-Insider , and GreenProphet, Ecoseed, NRDC OnEarth, MatterNetwork, Celsius, EnergyNow, and Scientific American. As a former serial entrepreneur in product design, Susan brings an innovator's perspective on inventing a carbon-constrained civilization: If necessity is the mother of invention, solving climate change is the mother of all necessities! As a lover of history and sci-fi, she enjoys chronicling the strange future we are creating in these interesting times.    Follow Susan on Twitter @dotcommodity.



  • Chad

    Um, are you people retarded? This whole cap and trade thing is going to ruin the modern world as we go into a dark age controlled by the U.N. I won’t be surprised if i get fined for using too much toilet paper in the near future. I’m not saying we shouldn’t conserve and recycle but to do this so blindly is just dumb, we deserve what we get i guess.

  • Chad

    Um, are you people retarded? This whole cap and trade thing is going to ruin the modern world as we go into a dark age controlled by the U.N. I won’t be surprised if i get fined for using too much toilet paper in the near future. I’m not saying we shouldn’t conserve and recycle but to do this so blindly is just dumb, we deserve what we get i guess.

  • Ian

    And if you don’t like WaPo for it being part of big media, jump straight to the video by the EPA lawyers themselves:

    http://dotearth.blogs.nytimes.com/2009/11/02/epa-lawyers-challenge-cap-and-trade-for-climate/

  • Ian

    And if you don’t like WaPo for it being part of big media, jump straight to the video by the EPA lawyers themselves:

    http://dotearth.blogs.nytimes.com/2009/11/02/epa-lawyers-challenge-cap-and-trade-for-climate/

  • Ian

    While I realize that big media may be funded by polluting industries, and I also agree that nobody is obliged to find ‘facts from gross, icky conservative think-tanks…

    I believe that runaway optimism manifest in limited viewpoints is a much worse type of pollution.

    So, here, consider this article from two EPA lawyers:

    http://www.washingtonpost.com/wp-dyn/content/article/2009/10/30/AR2009103002988.html

  • Ian

    While I realize that big media may be funded by polluting industries, and I also agree that nobody is obliged to find ‘facts from gross, icky conservative think-tanks…

    I believe that runaway optimism manifest in limited viewpoints is a much worse type of pollution.

    So, here, consider this article from two EPA lawyers:

    http://www.washingtonpost.com/wp-dyn/content/article/2009/10/30/AR2009103002988.html

  • Susan Kraemer

    Ian, all of my source links in that series are all to the original environmental economists like Robert Stavins (on Why Free Allowances Are OK) who have worked for decades designing and refining legislation to reduce carbon pollution.

    Or to studies like the German Marshall Fund Study on how Europe DID in fact reduce its carbon footprint successfully using (even flawed)(but fixable)cap and trade.

    Unlike big media, this tiny blog is not funded by polluting industries, so I am not obliged to find my facts and studies from polluter-industry funded groups like the Cato Institute or the Heritage Foundation, which is deliberately fanning fears about climate legislation.

  • Susan Kraemer

    Ian, all of my source links in that series are all to the original environmental economists like Robert Stavins (on Why Free Allowances Are OK) who have worked for decades designing and refining legislation to reduce carbon pollution.

    Or to studies like the German Marshall Fund Study on how Europe DID in fact reduce its carbon footprint successfully using (even flawed)(but fixable)cap and trade.

    Unlike big media, this tiny blog is not funded by polluting industries, so I am not obliged to find my facts and studies from polluter-industry funded groups like the Cato Institute or the Heritage Foundation, which is deliberately fanning fears about climate legislation.

  • Ian

    As with your last post on allowances (http://cleantechnica.com/2009/09/23/cap-and-trade-101-why-free-allowances-are-ok/), all I see is narrow reporting and wishful thinking. Your argumentation is almost entirely self-referential!

    Take into consideration a wider array of evidence (like this excellent piece:

    http://greeninc.blogs.nytimes.com/2009/10/27/climate-change-policy-and-safe-investing/) and also, do what you can to deal with comments like Sharon’s (http://cleantechnica.com/2009/09/23/cap-and-trade-101-why-free-allowances-are-ok/comment-page-1/#comment-101149).

    That would be better blogging.

  • Ian

    As with your last post on allowances (http://cleantechnica.com/2009/09/23/cap-and-trade-101-why-free-allowances-are-ok/), all I see is narrow reporting and wishful thinking. Your argumentation is almost entirely self-referential!

    Take into consideration a wider array of evidence (like this excellent piece:

    http://greeninc.blogs.nytimes.com/2009/10/27/climate-change-policy-and-safe-investing/) and also, do what you can to deal with comments like Sharon’s (http://cleantechnica.com/2009/09/23/cap-and-trade-101-why-free-allowances-are-ok/comment-page-1/#comment-101149).

    That would be better blogging.

  • Susan Kraemer

    Before you close your doors, Captain Morgan, check these options.

    http://cleantechnica.com/2009/10/25/10-practical-suggestions-for-how-a-polluting-company-can-easily-reduce-its-greenhouse-gases/

    Its cheaper in the long run to opoerate efficiently and make renewable power out of your waste.

  • Captain Morgan

    I suppose that if there are no permits available, these nasty polluting companies will just shut their doors, eh? Do you think the EU governments will let that happen? Of course not … cap and trade is a money machine, and they’re not about to let it be sabotaged so easily. They will move the cap long before they allow a significant economic hit to their industrial base.

  • Captain Morgan

    I suppose that if there are no permits available, these nasty polluting companies will just shut their doors, eh? Do you think the EU governments will let that happen? Of course not … cap and trade is a money machine, and they’re not about to let it be sabotaged so easily. They will move the cap long before they allow a significant economic hit to their industrial base.

  • Susan Kraemer

    Before you close your doors, Captain Morgan, check these options.

    http://cleantechnica.com/2009/10/25/10-practical-suggestions-for-how-a-polluting-company-can-easily-reduce-its-greenhouse-gases/

    Its cheaper in the long run to opoerate efficiently and make renewable power out of your waste.

  • Thanks for your blog Susan. Just wanted to mention that unlike some other companies who do this, we are not-for-profit and we also use some of the money to support our campaigning activities. We are actively lobbying for tighter caps and improvements to the policy. We can have a much bigger effect that way.

    On floors and ceilings – the best floor is a tight cap – if the floor is being regularly breached then it is a clear sign that the caps are not keeping pace with the reductions being made – at that point there should be a review and tighter caps introduced. Otherwise a floor can just mask a weak cap. Conversely if the ceiling is being breached – though that’s highly unlikely in the early years – then it’s a sign that more needs to be done to boost the supply of solutions – either through linking to other schemes, extending scope, or supplementary policies to bring clean tech to commercialisation. There should be no reason to raise the cap since that would defeat the entire purpose.

    Thanks again,

    Bryony

  • Thanks for your blog Susan. Just wanted to mention that unlike some other companies who do this, we are not-for-profit and we also use some of the money to support our campaigning activities. We are actively lobbying for tighter caps and improvements to the policy. We can have a much bigger effect that way.

    On floors and ceilings – the best floor is a tight cap – if the floor is being regularly breached then it is a clear sign that the caps are not keeping pace with the reductions being made – at that point there should be a review and tighter caps introduced. Otherwise a floor can just mask a weak cap. Conversely if the ceiling is being breached – though that’s highly unlikely in the early years – then it’s a sign that more needs to be done to boost the supply of solutions – either through linking to other schemes, extending scope, or supplementary policies to bring clean tech to commercialisation. There should be no reason to raise the cap since that would defeat the entire purpose.

    Thanks again,

    Bryony

  • Susan Kraemer

    Bill, no doubt they do now; the EU pioneered this stuff, but they made it modifiable so that all the problems they discovered as they went into it could be fixed once they found them, as detailed in previous post:

    http://cleantechnica.com/2009/09/28/what-the-senate-should-know-about-cap-and-trade-in-europe/

    And in fact we have learned from their mistakes in writing ours. Ours sets not just a floor for carbon prices, but a ceiling too.

    (And oversight, and consumer protections against high prices through utility rebates:

    http://cleantechnica.com/2009/09/11/76-of-cap-and-trade-bill-allowances-benefit-people-not-polluters/

    Waxman-Markey in the House was good, currently CEJAPA in the Senate is better(oddly), but next they need to vote in the Senate (that will water it down) (you can weigh in at (202) 224 3121 to say not to) then reconcile them in conference.

    Thanks, Zack!

  • Susan Kraemer

    Bill, no doubt they do now; the EU pioneered this stuff, but they made it modifiable so that all the problems they discovered as they went into it could be fixed once they found them, as detailed in previous post:

    http://cleantechnica.com/2009/09/28/what-the-senate-should-know-about-cap-and-trade-in-europe/

    And in fact we have learned from their mistakes in writing ours. Ours sets not just a floor for carbon prices, but a ceiling too.

    (And oversight, and consumer protections against high prices through utility rebates:

    http://cleantechnica.com/2009/09/11/76-of-cap-and-trade-bill-allowances-benefit-people-not-polluters/

    Waxman-Markey in the House was good, currently CEJAPA in the Senate is better(oddly), but next they need to vote in the Senate (that will water it down) (you can weigh in at (202) 224 3121 to say not to) then reconcile them in conference.

    Thanks, Zack!

  • Zachary Shahan

    good post, Susan! 🙂 great find & good coverage of it

  • Bill Woods

    Why don’t European governments have standing offers to buy all permits offered at some price, thus setting a floor under the market? Allowing the price to fall to low levels does nothing to promote low-carbon power.

  • Bill Woods

    Why don’t European governments have standing offers to buy all permits offered at some price, thus setting a floor under the market? Allowing the price to fall to low levels does nothing to promote low-carbon power.

  • William Coffin

    This is a good idea, but not a new one. Carbon Retirement have been selling and retiring pollution rights for more than a year now. Today’s price: US$28.68 per tonne.

  • William Coffin

    This is a good idea, but not a new one. Carbon Retirement have been selling and retiring pollution rights for more than a year now. Today’s price: US$28.68 per tonne.

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