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Cap & Trade
According to the United State Environmental Protection Agency, "Cap and Trade" is a market-based policy tool for protecting human health and the environment. A cap and trade program first sets an aggressive cap, or maximum limit, on emissions. Sources covered by the program then receive authorizations to emit in the form of emissions allowances, with the total amount of allowances limited by the cap. Each source can design its own compliance strategy to meet the overall reduction requirement, including sale or purchase of allowances, installation of pollution controls, implementation of efficiency measures, among other options. Individual control requirements are not specified under a cap and trade program, but each emissions source must surrender allowances equal to its actual emissions in order to comply. Sources must also completely and accurately measure and report all emissions in a timely manner to guarantee that the overall cap is achieved.
Related Links
- Center for American Progress, Cap and Trade 101: What Is Cap and Trade, and How Can We Implement It Successfully?
- Congressional Budget Office, An Evaluation of Cap-and-Trade Programs for Reducing U.S. Carbon Emissions (June 2001)
- Environmental Defense Fund, What Is Cap and Trade?
- New York Times, "The Real Climate Debate: To Cap or to Tax?", article by Tom Redburn, published: November 2, 2007.
- Pew Center on Climate Change, Climate Change 101: Cap and Trade
- Union of Concerned Scientists, How It Works: Cap-and-Trade Systems
- U.S. EPA Web Page on Cap & Trade in Clean Air Markets
- Wikipedia Page on Emissions Trading