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.

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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…
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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…
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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…
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China Announces It Will Launch Cap-and-Trade System

While visiting the U.S. last week and meeting with President Obama, China’s President Xi Jinping announced the country’s new cap-and-trade system. The system…
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Pope Francis Is Right on Climate Dangers, Wrong on Policy Options

The pope was right to call for a more ethical sustainable development that can meet our economic needs while also protecting the environment.…
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Regional Cap-and-Trade Shown to Save Money While Boosting Economy and Cutting Emissions

When the multi-state Regional Greenhouse Gas Initiative was established, organizations like the Institute for Energy Research and the Heritage Foundation argued against any…
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The Good News About Higher California Carbon Prices

California carbon prices keep rising, but for once higher prices are a good thing.
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Oregon’s Climate Control Legacy

Oregon was on the leading edge of domestic climate policy in the late '90s with the nation's first carbon dioxide regulation, but it…
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First ‘Avoided Forest Conversion’ Offsets Purchased in the California Market

California's carbon offset program just saw another first: The Climate Trust has received the first California carbon offsets from an 'Avoided Forest Conversion'…