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Cap And Trade Essay

2081 words - 8 pages

The population of man continues to dramatically rise around the world. This unabated growth has steadfastly encroached upon the environment, placing the environment under distress and placing increasingly larger demands on supplies of natural resources. The environment has been affected by the modernization of populations across the globe resulting in more and more pollution being introduced into the environment as result in increased usage of natural resources such as fossil fuels. Of major concern to present populations are the pollutants introduced into the earth’s atmosphere from continued use and dependency of fossil fuels. These airborne pollutants are usually referred to as green house gases (GHG). Carbon dioxide while not the only GHG is the most discharged GHG pollutant and is generally the GHG that garners the most media coverage.

The major concern with GHG is the ability of GHG (like carbon dioxide, CO2) to absorb and trap heat while the pollutant is present in the atmosphere. It is believed by many the global temperature can be adversely affected if sufficient amounts of GHG emissions saturate the atmosphere. Most scientists agree the average temperature of the earth is rising. The earth has experienced many cycles of global warming and global cooling throughout its history. What is often debated is the amount of impact the pollutants from burning fossil fuels have on global warming. Most agree however, GHG should be regulated and reduced. One method touted as means for controlling GHG emissions is the cap-and-trade or carbon trading.

A cap-and-trade program for GHG would be a system by which a limit (cap) is placed on the amount of GHG released into a given area. Emission credits would be created and issued. Enough credits would initially be created to match the cap. Each emission credit would give permission to release a specific amount of GHG. Those emission credits not used could be traded on the open market. The cap would gradually be lowered over time thus increasing the value of the credits and forcing the reduction of GHG emissions.

In the early 20th century, British economist Arthur Cecil Pigou was the first to propose holding polluting industries responsible for damage done by carbon emissions. It was not until the 1960’s when the idea of emission trading was first conceived by the economist John Dales as a way of controlling pollution. In 1990, the Clean Air Act became law and emissions trading, a component of the Clean Air Act, became reality. The first emission trading deal was conducted by the Tennessee Valley Authority in 1992 and the term cap-and-trade was first coined in 1995.

The Clean Air Act (1990) was enacted in the United States as a means to reduce the amount of sulfur dioxide discharged into the environment. In the 1980’s American power plants emitted vast amounts of sulfur dioxide into the atmosphere. The pollutant was contaminating the earth in the form of acid rain. The acid rain was...

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