Capping and Trading

Alex Gortz


Over the course of this blog, we will most likely talk a lot about climate change and global emissions. But what can we do about this problem and how can we stop this ever-evolving crisis? This has obviously been discussed by various politicians on the state, federal, and international stage and one of their most promising, if controversial, plans is the notorious cap and trade system.
The cap and trade system strives to lower global and regional carbon emissions across the board while also providing positive economic benefits. The “cap” of the system is ever decreasing limits on the amount of carbon emissions that are produced by companies. While the “trade” portion of the system allows companies to buy and sell their caps based on their need for emissions.
        The targeted corporations are often involved in the manufacturing, agriculture, and mining sector. Those corporations have already made a serious impact on climate change, as the Carbon Emissions Report in 2017 explains, “Just 100 companies are responsible for around 71% of all carbon emissions.” However, there is still hope, already countries and organizations such as China, The European Union, and Australia have implemented multiple anti-emissions systems as part of a climate change battle set forth by the Paris Climate Accords signed in December of 2015.

The cap and trade system has made large improvements against climate change. In California, the cap and trade system has decreased carbon
emissions by over 16.4 million metric tons of carbon from 2015 to 2017, a decrease of around 5%. Similarly, in China, carbon emissions are predicted to peak in 2030 and their implementation of the system has provided large economic stimulation for various companies trading their caps.
 Large scale policies like this don’t come without their critics and the cap and trade system is no exception. The Institute for Energy Research, an oil-backed non-profit, explains, “Americans could suffer up to $6,752 of disposable income a year” with a cap and trade system. Foreign Affairs concludes, stating, “A cap and trade system is a thinly veiled energy tax which poorly affects the environment.”
 Whether you stand by cap and trade until the end of time or tout its negatives one thing is clear: aggressive climate change policy is a must in the 21st century.


Comments

Anonymous said…
I do agree with the fact that the government does possess the power to ensure that nations minimize their harmful impact on the environment as nations need to be able to balance maintaining and expanding the scope of their economies with preventing the long term destruction of the environment. The imposition of the cap and trade method has proved to be successful in the U.S. to reduce emissions of sulphur dioxide and nitrous oxide (which contribute to the formation of acid rain) by nearly half, and in Tokyo reduced carbon emissions by 25% from 2000 to 2020, which proves that the system can be effective. An alternative method is a carbon fee where carbon emissions are priced in order to encourage companies and households to pollute less by investing greener technologies ( it is a charge placed on greenhouse gas pollution from the burning of fossil fuels). A carbon fee essentially places a monetary cost on the costs that would be associated with the effect of greenhouse gases, which influences increased innovation in cleaner solutions. However, the cap and trade system does provide a greater degree of certainty regarding that the amount of greenhouse gas emissions will be reduced while the carbon tax only provides certainty regarding the price. On the other hand, a carbon tax does provide the advantage of being easier and faster for governments to actually use since the cap and trade system is more complex as a greater amount of time is required to develop the system to avoid loopholes and it also requires the development of a greenhouse gas emissions trading market. There has been discussion of whether a cap and trade system or a carbon tax would be effective, when in reality it really depends on the design of each system, because if both are well-designed, they can be used together for maximum efficiency to reduce emissions. (Source: https://davidsuzuki.org/what-you-can-do/carbon-tax-cap-trade/0.)
January 18, 2019 at 10:15 AM
Anonymous said…
This is a great blog post! I really enjoyed it! Without getting too political, what would be our best bet to combat carbon emissions? I’m not sure if it was in this class or my AP Gov, but I remember talking about large companies buying tickets, essentially, that allow them to emit x amount of carbon. I believe they partnered with a farm or ranch that protects the environment up to a certain point so that these companies could “safely” emit x amount of carbon. This still is not putting the cap on emissions. Large corporations can afford to pay the small fine for emmitting the additional carbon emissions, thus, never capping environmental deterioration. Would it be better for the government to largely subsidize alternative forms of energy and encourage firms and businesses to switch over? What would be ideal as of now?
January 18, 2019 at 11:42 AM
Anonymous said…
I think it is good that companies are attempting to lower their carbon emissions. I agree that a climate change policy is essential. The cap and trade has been successful in reducing carbon emissions, but there are probably more effective policies that could be enacted. Part of the problem is that there are some people that do not want to acknowledge climate change, much less create laws to reduce its negative effects. People need to understand climate change is a problem in order to find a solution to the global problem.
January 18, 2019 at 1:25 PM
Anonymous said…
I found interesting to see what the world has done in order to stop this epidemic of global warming. They realize the effects of global warming and how the increase in temperatures can harm the environment and destroy some habitats. I also found it interesting that this method of cap and trade is proving to be very successful as some of the most polluted countries, like China and the United States, has attempted to put in their time and research to fix this global issue. I think it is very important that people realize the attempts to fix this global issue and fight for the same cause.
January 19, 2019 at 10:41 AM
Anonymous said…
I was pleasantly surprised to learn that there is a worldwide effort to tackle the issue of carbon emissions while also taking into regard the effects on the economy. It is important that there is recognition on a global scale of the necessity to reduce carbon emissions, and the institution of capping and trading helps with this. I wonder if rather than capping, governments placed a tax on companies that exceeded a set amount of carbon emissions (depending on the nature of the company), and if this would help with the overall reduction of emissions, rather than just dividing them up among companies. I feel that this would afford greater economic opportunity, as companies would be able to purchase cheaper caps from other companies that in turn could avoid unnecessary taxes. Taxing would also discourage any emissions as a whole, and I feel that this is something interesting for nations that have had success with capping (the US and Japan) to look in to.
January 21, 2019 at 1:26 PM
Anonymous said…
I think it is really great that companies are finding ways to lower the emissions of carbon and other dangerous gases that negatively impact our environments. I also think it is interesting that the cap and trade system has successfully lowered emission rates in highly polluted places like China. It’s nice to know that people are beginning to realize the importance of protecting this earth and are finding ways to help cope with the effects of global warming. I still think that more needs to be done though. Climate change is an issue that will gradually become more and more detrimental. More laws, policies, and regulations need to be put in place.
January 21, 2019 at 8:45 PM
Anonymous said…
I believe that the cap and trade system has been extremely beneficial in the role against climate change. Although this process is beneficial, I do not think that the cap and trade system can solve the majority of issues with climate change today. Personally, I do not believe that the idea of 'trading' caps would be entirely successful. However, I did find it surprising that California has benefitted from this systems, especially because the United States has pulled out of the Paris Climate Accords. I wonder if any other states have benefitted from this process as much as California.
January 22, 2019 at 4:32 PM
Anonymous said…
I believe that the cap and trade system is beneficial in reducing our carbon emissions, but is only the beginning. It's great that we've started something to help, but I think that there is no way to greatly impact our carbon emissions without somehow damaging the economy. I think more awareness needs to be established of how important protecting the environment is. Once people realize this, my hope is that there is a spiral of laws and policies to help. However, for now, this is a great start that doesn't change too much about our current lifestyle.
January 22, 2019 at 6:10 PM
Anonymous said…
I agree. I think that the cap and trade is an effective way to reduce emissions in pollution. There are both pros and cons to this method though. It does create new economic resources for industries. Companies will be encouraged to lower their emissions because there is a low cost to do so. Additionally cap and trade could potentially help fund alternative energy resources. However, it would create higher prices for goods and services for consumers like us. Renewable energy sources are still relatively new, which means they are relatively expensive. For industries that do transition into lower emissions and follow cap rules, there is a good chance that the products that they produce are going to be more expensive in the future. Overall, regardless of the numerous advantages and disadvantages, in my opinion any effort to help save the world for future generations is a good one!
January 22, 2019 at 7:35 PM
Anonymous said…
I believe that a market-based approach like cap and trade allows countries to make more ambitious climate goals. The cap typically declines over time, providing a growing incentive for industry and businesses to reduce their emissions more efficiently, while keeping production costs down. This market – the "trade" part of cap and trade – gives companies flexibility. It increases the pool of available capital to make reductions, encourages companies to cut pollution faster and rewards innovation.

January 22, 2019 at 7:56 PM
Anonymous said…
The article was actually very intresting as I didn’t know about this new guideline for pollution reduction at all. However I feel, that this is not enough to end pollution in the long run and might just hurt smaller companies in the future. These kinds of policies would have to have strict govermental observance though as without it companiesmay just monopolize to increase their cap thus forcing small businesses to have many issues. Despite this, the cap program can be a real good step in the right direction as Introducing these kinds of restrictions on corporations and such show that they need to make sure to take into consideration the enviremont. Furthermore, companies should probably be taxed moderately if they pass this carbon limit. This will be able to effectively lower the amount of emissions to some extent as turning the largest profit is most often the concern.
January 22, 2019 at 8:07 PM
Anonymous said…
The idea of capping and trading is an interesting idea I had never known about. It combines environmental policy with an economic backbone to make its feasible for companies to follow. The idea of restricting companies carbon emissions while allowing them to buy larger caps ensures that companies that need more emission space are able to do so while also providing a baseline that all the companies must follow. However, implanting these policies may be difficult, as companies may shift their locations into different countries with more lax rules. Enforced at a global scale, as is currently the plan, the cap and trade system can be extremely beneficial in reducing carbon emissions and is an intelligent solution to a complex problem.
January 22, 2019 at 8:45 PM
Anonymous said…
This capping and trading system really sticks out to me because I wasn’t aware that carbon emissions could be treated as a commodity, bought and sold like a product. It seems promising because it places a finite limit on the amount of carbon emissions that can occur, but they are simply passed around between the companies that need them the most at the moment. This could be helpful even to wean off of fossil fuel usage altogether. Small steps such as this will eventually add up to create a big impact.
January 23, 2019 at 4:51 PM
Caroline Tuggle said…
Getting to see another person’s perspective on this issue was very interesting. I do agree that the government has the power to act on this issue to a greater degree. The amount of carbon that we produce as a population is outrageous and seeing plans such as the cap and trade system successfully decrease that amount is really awesome! I believe that in order to really make a dent in reducing carbon emissions is for more programs such as the cap and trade system should become dominant in this conversation. As amazing as this system is, I do not believe that they alone can make a noticeable enough dent to prove its worth for those who believe it is a wasted effort. Countries all over the world should begin to incorporate ideas of reduced carbon emissions into many aspects of how they function as a people, and I definitely agree that this is an awesome first step to greatly reducing carbon emissions in our atmosphere.
January 23, 2019 at 4:55 PM
Anonymous said…
The idea that carbon emmisions could be bought and sold, through the cap and trade system, seems to have a very important place in helping reduce carbon emmissions in the enviroment espeically in the future. Considering California reduced its carbon emmesions by 5% alone, the impact of the cap and trade system globally could be a huge step to reducing carbon emmsions in the atmosphere. Though this step is significant, there is still much more countries can do to limit carbon emmisions in the atmosphere.
Adam Ghanem
January 23, 2019 at 6:00 PM
Anonymous said…
I think it is very crucial to think of the future when it comes to carbon emmisions. The very idea of the cap and trade system is a huge step forward to achieving the reduction of these harmful emmisions because climate change is a gigantic controversy that not everyone believes in. I think that the society should become more aware in the intensity of the amounts of carbon we emit and understand that if we were to continue to release them into the atmosphere, then it would be more difficult to save the environment. People need to realize their ecological footprints and find ways to suffice without using up so much. So I think systems like the cap and trade is an awesome way to bring about awareness in carbon emmisions without it being a huge political controversy.
January 23, 2019 at 8:33 PM
Anonymous said…
I think capping carbon emissions is an crucial step to having a sustainable environment. The political climate of our society is so tense that environmental issues get cast aside when the solutions aren’t what a specific party wants. Many of these solutions are seen as “too expensive”, but will that really matter if we fail to act now and our entire planet is destroyed as a result? Our country additionally needs to be more cooperative with other countries to find solutions for these environmental issues because ultimately America isn’t the only country that has a future at risk.
January 24, 2019 at 12:39 PM
Anonymous said…
The cap and trade system is a step forward into the realm of environmental regulation. It’s vital for America to tighten its control over its emissions, considering that America is responsible for nearly 16% of global carbon emissions. Our industrial and agriculture sectors create tons of carbon and face little to no reparations. The government has the responsibility of ensuring environmental and economic health for its citizens, and the cap and trade system is a step in the right direction. By imposing financial penalties on companies who contribute the most to emissions, I believe that these corporations will be effectively forced to pay for the damage they do to the environment, or lessen the damage they do. As shown in California, restrictions like the cap and trade system effectly lessen emissions. America needs to release itself from its overly individualistic mindset that only focuses on personal profit to start caring more about the environment and America as a whole.
January 24, 2019 at 12:43 PM
Anonymous said…
The Cap and Trade system appears to be an ideal way to control the vast pollution from a select few companies. It is surprising both to see that steps are being taken to take care of the environment and the large role that our economy has taken in the world. It is interesting that at this point in time even taking care of the environment is requiring an economic approach. I can see how this system may lead to fraud through shortcuts and not properly following its guidelines. However, it is also very impressive the large difference that is has already made in the world (especially California) and the ingenious plan of limiting pollution by charging for it.
January 24, 2019 at 4:58 PM
Anonymous said…
The cap and trade system seems to be an efficient way to regulate carbon emissions from the major companies, especially since just 100 companies are responsible for 71 percent of all carbon emissions. The system may, however, lead to larger corporations buying up more cap and leaving the small companies very little to work with.
January 24, 2019 at 9:14 PM
Anonymous said…
It was interesting to hear and learn about a method of reducing pollution that I did not previously know about. It seems that it is a step in the right direction for America and the world to begin in a world of more environmental awareness. Although it is considered an expensive method at the moment, I think more and more development in this path and others could possibly lead to even more efficient ways to better the planet while still satisfying the critics who say the monetary aspect makes it impossible.
January 24, 2019 at 9:16 PM
Anonymous said…
Pollution and Carbon emissions are a growing problem in the status quo, so a system such as the cap and trade system seems like an helpful way to reduce the emissions across the board. The fact that only 100 countries produce 71% of the carbon emissions is staggering, but the Cap and trade System seems like a step in the right direction. It's already making huge differences in places such as California, and may be the start to more efficient ways to reduce emissions.
January 24, 2019 at 9:28 PM
Yashu said…
It's nice to see that people worldwide are trying to reduce the amount of carbon emission they put out into the atmosphere, especially companies who emit the most gases. I think that the cap and trade is an effective way to reduce emissions in pollution. I feel that this would result in a lot more economic opportunity because companies are able to make use of purchase cheaper caps and taxes wouldn't be as big of a problem. I loved this blog post and I think it was very informative as I had never heard of some of these methods before.
January 24, 2019 at 10:01 PM
Anonymous said…
I think it is very interesting to learn of a possible revolutionary process of reducing pollution. I believe it is important for all nations to look at this and make a move in the right decision to help the environment. The cap and trade definitely seems like the most logical move in order to reduce emissions. It is important once we make this step we fully commit and come up with more intuitive ways to reduce emissions
January 24, 2019 at 10:07 PM
Luke Farinelli said…
In my opinion, this capping and trading seems like a giant distraction from the real problem industrys face and thats the fact that they use too many resources and pollute too much. Putting a bandaid over a problem like this doesnt help anyone and ends in the desensitization of the subject. Its astounding how you said some people don't like it because it could lead to a subtle decrease in productivity when really they should be focusing on the fact that in total, it wont do enough to stop our environment from changing.
January 25, 2019 at 5:29 PM
Anonymous said…
The capping and trading system seems like an efficient way to help regulate carbon emission for bigger companies. With all the carbon we produce, I think more measures need to be made to reduce the amount of carbon in environment, but this is a good step to take in reducing it.
January 27, 2019 at 8:15 AM
Anonymous said…
I do not think the cap and trade system is a solution to the large issue at hand. To many questions would arise out of this suggestion. I think it’s to general of a claim to argue that California has directly benefitted from this system. California, as we know, is a generally liberal state and has numerous environmental regulations already in place to help improve the environment. I think the cap and trade system points more towards economic benefits and not environmental benefits. Additionally, how would the government regulate this system? How would they determine whether or not each company is playing by the rules? And if the government isn’t involved, how is this system going to be instituted and regulated?
January 28, 2019 at 8:40 PM
Luke Farinelli said…
This is Luke Farinelli
January 29, 2019 at 4:07 PM
Anonymous said…
This is a very interesting take on how to reduce emissions in pollution and may have enough support to be effectively used. However I do not believe that this tactic will last in the long run and constitently reduce pollution. More steps and precautions definitely have to be made but this idea seems to be a good stepping stone in reaching the goal of reducing carbon emmisions
January 31, 2019 at 8:15 AM
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