Cap and Trade 101

Cap and Trade is a market based policy tool, which sets a cap on the amount of emissions from a group of sources with the end goal of reducing the overall pollution in a nation, region, or industry.

The intention is to incentivize a reduction in emissions and penalize those who don’t comply. Participants in Cap and Trade receive allowances and can design their own compliance strategy giving them flexibility to sell and purchase emissions, in addition to other methods in order to comply with total allowances limited by the cap.

This system is a popular option used to reduce emission of pollutants, most notably green house gases. It operates similarly to a stock market in which the benefit of the system goes to the nations, regions or industry that are able to reduce their emissions through its use.

Carbon tax, climate change, congress, ExxonMobil, Rex Tillerson, Republicans, Leon Kaye, energy industry, Rex Tillerson, cap and trade

ExxonMobil Pays Lip Service to a Carbon Tax

Despite public statements, a review of ExxonMobil’s campaign contributions -- especially during this election cycle -- indicates the company is funding climate deniers.
Environmental justice considers the local environmental impact of air and water pollution from industry. Consider this housing community situated right next to an oil refinery in Richmond, CA

Environmental Justice Wins with California Cap-and-Trade

Environmental justice is in need of a win, especially when the current climate crisis serves to magnify racial inequality and dramatically effects the…
ExxonMobil, Elon Musk, Tesla, carbon tax, carbon pricing, climate change, renewables, clean energy, emissions, Leon Kaye, libertarian

Elon Musk’s Libertarian Case for a Carbon Tax

A recent Q&A session with Tesla's Elon Musk at first focused on tax breaks, then morphed into a libertarian case for a carbon…
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Considering Ontario’s Climate Change Solution

This summer, Ontario solidified a five-year action plan to promote clean energy and support the long-term shift to a low-carbon economy. Critics say…
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Bonn Climate Talks Set to Work Out COP21 Details

Despite all of the attention garnered by the December COP21 climate talks in Paris, the follow-up meeting this week in Bonn, Germany --…
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New Partnerships Aims to Streamline Carbon Pricing

A new partnership led by former U.S. Vice President Al Gore and Ecofys seeks to investigate how effective carbon pricing can better lead…
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Compliance Instrument Trends in the California Cap-and-Trade Program

The California cap-and-trade program recently completed another successful allowance auction, providing an opportunity for lessons learned regarding compliance instruments. The market demand for…
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What is an Internal Carbon Price, and Should My Business Implement One?

In response to these schemes, or in anticipation of future carbon-pricing legislation, this year the CDP reported that 437 large companies say they…
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A Pricing Alternative To COP21

As an economist, I have a jaundice view of the COP21 agreement. My skepticism ties to a lack of price signals included in…
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World Bank Announces New Carbon Pricing Initiative

On Tuesday morning the World Bank, along with governments and business leaders, announced a new global initiative: the Carbon Pricing Leadership Coalition.
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REDD Offsets in California?

The California Air Resources Board is considering how carbon offsets generated through REDD could fit into its cap-and-trade program.
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Carbon Pricing: Putting a Cost on the Environmental Instigators of Climate Change

We speak with Joe Madden, CEO and co-founder of EOS Climate, about the complex process of carbon pricing, and why some believe that…
International Monetary Fund, IMF, Christine Lagarde, COP21, carbon tax, cap and trade, climate change, Leon Kaye

IMF Managing Director Calls for Carbon Tax

The IMF has become the latest advocate for a new twist on financial reform as its managing director, Christine Lagarde, has added her…
Oil and gas, renewables, clean energy, COP21, carbon tax, shell, Leon Kaye

Shell CEO Creates Tension in the Fossil Fuel Industry with Call for Carbon Tax

A recent speech Shell CEO Ben van Beurden gave at an energy trade association meeting emphasized the need to build a global carbon…
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Bipartisan Carbon Tax Back From the Dead

These politicians believe a hefty corporate tax break is key to gaining bipartisan support for an aggressive carbon tax. Will it provide Republicans…