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.

The Arcata City Forest Barnum Tract is a community forest located in Northern California creating verified carbon offsets through the Climate Action Reserve’s (CAR) Forest Project Protocol.Offsets from this project come from a tract of land that was purchased and added to the City of Arcata’s community forest in 2003. The land was purchased from a timber company and was determined to be at high risk of intensive harvesting or cutting. The forest is now certified to Forest Stewardship Council (FSC) management standards and absorbs and stores approximately 2,500 more metric tons of C02 a year than neighboring forests, or the equivalent of taking 550 cars off the road each year. The sale of carbon offsets is a critical component of the funding for the management of the forest, which is completely self-funded with no reliance on tax-payer dollars. Image courtesy Terrapass.

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