Earth Equity News

The History of Cap-and-Trade. By Richard Conniff, Smithsonian, July 2009 issue. "An unlikely mix of environmentalists and free-market conservatives hammered out the strategy known as cap-and-trade [in the 1980s as a mechanism to control acid rain]... No one knows whether the United States can apply the system as successfully to the much larger problem of global warming emissions, or at what cost to the economy. Following the American example with acid rain, Europe now relies on cap-and-trade to help about 10,000 large industrial plants find the most economical way of reducing their global warming emissions. If Congress approves such a system in this country -- the House had approved the legislation as we went to press -- it could set emissions limits on every fossil-fuel power plant and every manufacturer in the nation. Consumers might also pay more to heat and cool their homes and drive their cars -- all with the goal of reducing global warming emissions by 17% below 2005 levels over the next ten years. But advocates argue that cap-and-trade still beats command-and-control regulation. 'There's not a person in a business anywhere,' says Dan Esty, an environmental policy professor at Yale University, 'who gets up in the morning and says, Gee, I want to race into the office to follow some regulation. On the other hand, if you say, There's an upside potential here, you're going to make money, people do get up early and do drive hard around the possibility of finding themselves winners on this.'" [Editor's Note: In our opinion, cap-and-trade involves far more command-and-control regulation -- necessary to enforce the caps -- than does a carbon tax.]