The Basics of Cap & Trade

This article is a post that comes from Greening Forward’s legacy blog. It was originally written by Shannon Kollasch on December 18, 2016.

Published: Dec 29, 2020

There are seven billion of us here on Earth, and we have a problem you probably have heard of — global warming. The Intergovernmental Panel on Climate Change is projecting deathly predictions of a 1.4–5.8º C (2.5–10.5º F for us Americans) temperature increase by 2100. That is an increase that can lead to wars, famine, and destruction. Solutions that have been tried so far have been largely ineffective. (Doesn’t help that the leaders of our world continue to delude themselves of the threat of climate change!) So yeah, it’s awkward.

We need to make a policy change that actually targets the problem: the carbon in our atmosphere. One of our best options is to start a cap and trade program. This post is here to inform you of the basics of cap and trade! And, since we like nature and we like to not be too sad about our impending doom, I’m just going to take the liberty of adding Gifs of bird mating dances.

What are Cap and Trade?

Cap and trade is a system where we create a limited amount of carbon “credits” which allow companies to put a certain amount of carbon in the atmosphere. We distribute these credits among companies, which can either use them by producing greenhouse gases (GHGs), or trade them to other companies for profit. If they produce more GHGs than they were allotted, they get a penalty.

Why Does Cap and Trade Work?

Cap and trade are not only good for the environment — it can potentially help businesses too. First off, Cap and Trade let us limit the total amount of GHGs produced, allowing us to gradually lower the amount of carbon we’re putting into the atmosphere. Since businesses can trade carbon credits, businesses profit from innovation that reduces their emissions. Moreover, businesses that have a hard time decreasing their emissions have some flexibility; they can buy more credits if they have to. So, what does this all create? It creates a concrete plan to lower emissions, while still being business-friendly. Basically, it tackles the carbon problem right at its heart: the fact that GHGs can be produced (which is a cost to the environment) without any cost being absorbed by the producer.

Who Supports Cap and Trade?

Believe it or not, Cap and Trade were first proposed by Republicans in 1970. In the 1980s, it was used by President Ronald Reagan and favored by President George H. W. Bush. Unfortunately, we seem to have taken a step backward on that front, as any Republican who wants to be anything these days must deny the fact that climate change is even occurring. (I mean what do scientists know about anything?) Still, we have many people and organizations supporting cap and trade today.

It’s true that cap and trade have their pros and cons, but in a world that seems to be reacting too slowly to climate change, all viable solutions should be assessed and some of those solutions must be implemented sooner rather than later. While we drag our feet dealing with global warming there are populations and regions that are more vulnerable than others to negative effects. Even if humans had wings (wouldn’t that be cool?) we still would not be able to escape the inevitable consequences of climate change.

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