Cap & Trade Theory

by Benjamin Young

Overview

Many scientists have agreed that in order to protect our environment we must decrease the amount of carbon emitted into our atmosphere. The cap and trade theory supposedly creates a system which would result in the reduction of carbon emissions.
The Cap

The theory is to set a nationwide cap or limit on the amount of carbon emissions allowed into the atmosphere. Every year the cap would be reduced based upon a gradual schedule. As the cap is lowered, the amount of pollutants into the atmosphere would be reduced.

Carbon Permits

The government would issue yearly carbon permits to industrial companies, which would set the amount of carbon emissions which the company can legally emit. Every year, as the limit of emissions is lowered, fewer permits would be available.
The Trade

According to Annie Leonard, the producer of the acclaimed web video "The Story of Cap and Trade," as the permits decrease in amount, they would become more valuable. Companies that pollute less because of technological innovations or policy changes will have extra permits which they can sell to companies that need more permits.
Supporters

Supporters of the theory, like the Environmental Defense Fund (EDF), state that the cap and trade theory will allow companies to "turn pollution cuts into revenue," leading to "more cost-effective pollution cuts" and an "incentive to invest in cleaner technology." The EDF has even stated that "No other system can guarantee to lower emissions."
Opponents

Opponents of the cap and trade theory, like Larry Lohmann, author of "Carbon Trading: A Critical Conversation on Climate Change, Privatization and Power," claim that this policy is merely a way to "delay the kind of structural change" needed to protect the environment and that major industrial companies that are "highly dependent" on fossil fuels and chemicals can "simply buy pollution credits or pollution rights."

Overview