Policy & Politics

Published on June 8th, 2010 | by Susan Kraemer


Five Good Things Cap-and-Trade Has Done For You

June 8th, 2010 by  

There is an uproar of misguided hysterical opposition by the ill-informed on the Left and by the very carefully mis-informed on the Right – all opposing the cap-and-trade policy being suggested to cut carbon emissions, within the climate bill.

The Left is certain that Green sellouts just want Wall Street Fat Cats to make a killing, the Right is certain that Al Gore will get rich off cap-and-trade in a 20-year plot to take over world financial markets.


Both are ridiculous fears. We’ve actually had cap-and-trade for years. You just haven’t heard about it, because each cap-and-trade market just worked, was economical, and got the job done. No Wall Street Fat Cats or Al Gore got rich.

If you’re glad there’s no more Ozone hole over Antarctica, thank cap-and-trade for that:


The essentials are a cap, which is a finite limit on total pollution. Every year the limit is set lower. This guarantees the pollution will be reduced. If not, big fines for offending polluter. Much, much less expensive for polluters to comply. Means the pollution gets reduced. (By contrast, a carbon tax could allow those who can afford it to keep polluting as much as they want. Does not guarantee a reduction.)


Trade enables the more efficient competitors within an industry to finance pollution-reducing-measures using funds from their competitors who chose to stay with the pollutant.  (By contrast, without trading among polluters, the funding for switching to a clean economy must come from taxpayers.)

With cap-and-trade, the funds come from within the industry being regulated. For example: Tesla, by being a clean automaker, was just able to pick up $13 million from its relatively dirty competitor Honda, reducing its R&D costs to innovate to build the solution to our dirty driving habit.

Here’s five pollutants we already reduced using cap-and-trade.

1. Getting the lead out of your gasoline. In the 80’s, congress set up a precursor to cap-and-trade that brought it closer than other credit programs using trading and banking of environmental credits. Job done, we have no lead in gasoline now, (so it must be something else that is making us dumber now!) and it was cheaper than expected for the oil industry to comply.

2. Closing the Ozone hole. Industrial manufacturers affected by the need to phase out refridgerant pollutants were put in a cap and trade system in order to meet the Montreal Protocol goals. They did meet the goals, phasing out CFCs and halons. It was not expensive.

4. Cleaning Los Angeles Air. Under under the RECLAIM cap-and-trade program begun in 1994, California’s South Coast Air Quality Management District has reduced NOx emissions 60% and SOx emissions 50%, and continues to (previous story) clean up.

5. Cutting Europe’s carbon footprint to half ours. The EU Emissions Trading System has operated successfully for two years and covered 11,500 emitters: not just oil and coal (as is proposed here), but metal, paper, glass and ceramics production as well. The paper industry cut its emissions almost in half, the auto industry over there now makes cars cleaner than ours and the EU  lowered its carbon emissions below its Kyoto targets.

3. Ending Acid Rain. A cap was placed on allowable emissions of SO2, a precursor to acid rain. The cap ratcheted down every year. It worked. The polluting coal plants traded among themselves with the EPA administering the program. We have no acid rain now, and it was cheaper than expected to stop polluting. SO2 emissions from the power sector decreased from 16 million tons in 1990 to 10 million tons in 2005, and now a 50% reduction has been achieved in the 20 years of the program.

Imagine if we could look back at 2010 and say this was the year we finally overcame our fear of the other side, and decided to work together to make something that good happen again. With oil now despoiling one our shining seas, its about time we did.

Image: The White House at Flikr

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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.

  • garret

    This is the most elementary, silly post about cap and trade.

    The comparison with capping Ozone has been widely shown foolish – carbon has impossibly higher technological needs!

    I like what is happening with the “deadly silence” on this foolish idea overall.

    • Name (required)

      what are you goth?

  • Great, succinct treatment of the fact that cap-and-trade can and does work. Another positive aspect is the whole area of offsets. The Kyoto Protocol’s Clean Development Mechanism will have dispersed nearly 1.8 billion bankable Certified Emission Reduction credits to the developing world by the end of 2012, not to mention having been the major stimulus, in many cases, for over two thousand quite effective and sustainable projects. Under a U.S. cap-and-trade law, these sort of offset projects will be available to farmers, renewable energy developers, green builders, etc, etc.

    I think you rightly identify the very serious problem of the Left thinking that cap-and-trade is a scheme invented by The Street. See my post here (http://climatechange.foreignpolicyblogs.com/2010/05/20/the-facts-of-cap-and-trade/) in which I look at the facts of cap-and-trade. This includes an exchange with a writer for Annie Leonard’s popular – and misguided – video, “The Story of Cap-and-Trade.” Nat Keohane’s video has the facts. So do you.

  • Ed Swanson

    If Congress chose simple carbon pricing, in lieu of arcane financial tools, consideration could be given to adopting a National tax schedule with published annual rates, projected out until National security and energy choice objectives are achieved.

    Many support this approach (instead of a casino-like commodity market) to progressively discourage use of dirty fuels, improve national security, and to allow revenue to be used as a “public good” for:

    a) PAYING TAX REFUNDS FOR ALLOCATED CONSUMPTION CREDITS (using established tax refund tools) to USA citizens and legal residents who file income tax returns (or for those who receive social security benefits);


    c) PAYING DOWN the National Debt.

    • Ed -The climate bill does do a.b.and c. But uses cap-and-trade revenue, not the carbon tax.

      How would a carbon tax set a limit on total carbon pollution? The aim is to stop climate change, like the aim under Montreal Protocol was to close the Ozone hole.

  • Megan – agreed.

    But I do title the list “Here’s five pollutants we already reduced using cap-and-trade”.

    ..and I include the mushy real life details in the body like “SO2 emissions from the power sector decreased from 16 million tons in 1990 to 10 million tons in 2005, and now a 50% reduction has been achieved in the 20 years of the program”.

  • Megan

    While some of these pollutants have definitely been reduced and the situations you’ve listed have significantly improved, I think it’s important that you realize that these things haven’t gone away completely. You can’t just say, “We have no acid rain now,” or that the ozone hole is closed. I would advise you to be a little more careful with your word choice.

  • Roger L


    Each one of the previous Cap and Trade implementations was done slowly and incrementally with if I am not mistaken considerable debate and with factored in long term implementation schemes. In fact if you look closely at the data you will probably find that the results of the implementations above most likely far exceed the original expectations. Most of the cap and trade ideas now (IMHO) are rushed and factored in as one big package accepted as a take or leave it from the politicians and typically presented in the approach that we don’t have time and the earth will die etc. etc if we don’t implement all of it now. If Congress would incrementally bring the items in front of the public and pass them as such with similar incremental implementation periods I believe they would be accepted. In fact some of the more intelligent Republicans have suggested such an incremental approach on each item but been shot down. If this approach was taken you would probably not have the polarizing approach that the debate over health care had with its all or nothing debate and large nature of things. 20 year programs as you note have been shown to work and the earth has been shown over that time as a very healing able planet, why is not congress mirroring that approach now I ask you???

    • No, every idea in these bills have been thoroughly debated for years, some for decades. You can listen to all the energy hearings at capitolhillhearings.org and you will quickly understand that the Republican obstruction is longstanding and truly not in good faith, like you imagine. Most Republicans saying “we can’t do anything on climate because China and India” and then leaving the room, and leaving just the Democrats to question winesses on options for how to speed up FERC reviews of offshore wind power or whatever each hearing is about.

      They voted against almost every idea in these bills multiple times since 1993.

      Here’s all the environment roll call votes 1993-2008 you can sift through if you don’t believe me:


      It took 6 to 8 times to get the production tax credits passed (by being snuck into Bush bank bailout), the Renewable Energy Standard has been filibustered by them when out of power at least 6 times. It never gets introduced when they are IN power.

      As to the urgency. Just as you and I believe scientific evidence in every other field, from engineers who make bridges stay up, to develop cancer cures, to do the theory and see it works to build and orbit space shuttles, so I believe scientists when they say that this has become EXTREMELY urgent.

      There was less pushback on Ozone only because refrigerant industry was not the most powerful and profitable industry on the planet, and it was not going to put them out of business.

  • Mauricio

    Wow, four actual tried-and-true CnT systems right in our backyard! I bet you 99% of the population has no idea we’ve had even one.

    It would be so much easier if people didn’t think of it as such as foreign, unproven, and European?? concept.

    We’ve done it. It works. Let’s keep saying that.

    Great article. Thanks!

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