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Cap and Trade
a solution for pollution?
What is Cap and Trade?Can Cap and Trade reduce Air pollution?
The cap is a legal limit set on one type of air pollution.
A coal fired power plant is ordered not to emit more than a certain number of tons of carbon dioxide per year, and is allocated one credit for each ton it is allowed to emit. Each year the cap is lowered, until the pollution is reduced to a level that scientists and regulators deem safe.
Trade is used because markets are used to trade those pollution credits. Polluters who clean up their act so much that they are well below their yearly cap can sell the leftovers for a tidy profit to others that cannot or will not meet their own cap. In some cases the government auctions the allowances instead of allocating them.
The idea is to create incentives for industry to invest in new technology and alternative fuel sources, with a level playing field ensured by continuous, verifiable emissions monitoring.
Will it work?
In the past it worked partly.
The track records for other cap-and-trade programs are sobering. Not one has definitively cleaned up a major environmental problem. Adding insult to injury, environmental justice advocates say the market programs have allowed power plants and other industry to keep spewing out toxic pollution by buying credits from elsewhere.
Some new cap-and-trade programs have demonstrably helped reduce pollution. But we are still not sure that a cap-and-trade system would deliver in time the significant cuts in greenhouse-gas emissions that we need to prevent catastrophic climate change.
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In general, under cap and trade, the amount of carbon that energy producers emit is capped. They can exceed that cap through the purchase, i.e., "trade," of carbon permits. The money for those permits would be collected by the government and presumably redistributed under a system still being crafted.
"The reality is the cap-and-trade legislation offered amounts to an economic declaration of war on the Midwest by liberals on Capitol Hill," Chairman of the House Republican Conference Mike Pence (R-Ind.)
"It's pretty clear that we are going to increase costs on every American with this plan -- and the other thing we need to keep in mind is the millions of American jobs we are going to put at risk if we impose this new tax on American industry when our competitors around the world will not," John Boehner (R-Ohio)
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