Strategies to Combat Climate Change: Cap and Trade

Cap and trade is a market-based policy tool for protecting human health and the environment by controlling large amounts of emissions from a group of sources. The “cap” sets a limit on emissions to reduce the amount of pollutants released into the atmosphere. The “trade” creates a market for carbon allowances, helping companies innovate in order to meet, or come in under, their allocated limit. The less they emit, the less they pay, so it is in their economic interest to pollute less.

Studies between 1967 and 1970 for the National Air Pollution Control Administration (predecessor to the United States Environmental Protection Agency’s Office of Air and Radiation) by Ellison Burton and William Sanjour demonstrated the efficiency of a cap and trade approach. The Clean Air Act of 1990 which placed a cap on NOx and SO2 gases took effect in 1995, and according to Smithsonian magazine, acid rain emissions dropped 3 million tons that year.

This policy has essentially stopped acid rain.
Some supporters: John McCain, Shell Oil, Dow Chemical

Carbon trading systems have tended to reward the heaviest polluters with ‘windfall profits’ when they are granted enough carbon credits to match historic production. Issuing permits should be more highly regulated since issuing too many or too few deincentivizes permit-liable firms from cutting back emissions.
Some Critics: Chevron Corporation, American Trucking Association, Greenpeace

























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