Cutting Carbon Emissions the Cap-and-Trade Way

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Speaking of climate change, one of the best ways of reducing carbon emissions is to implement a cap-and-trade scheme. Basically, the government sets a nationwide cap for carbon emissions and then auctions off permits on a quarterly basis. Companies can buy permits at auction, and they can later trade them on the open market as their needs vary. The government caps and companies trade. It’s a pretty elegant solution to reining in carbon pollution.

Of course, the whole point of these permits is that they raise the cost of energy, and Republicans quickly dubbed it cap-and-tax when Democrats tried to shepherd a bill through Congress, and that was enough to doom it. But that doesn’t mean it’s impossible everywhere. As I mentioned three years ago in my “10 Things You Should Know About Cap-and-Trade” article, Europe is already doing it. (It’s item #3.) Brad Plumer runs down a few of the growing pains they’ve had since their ETS program started in 2005:

The ETS handed out far too many pollution allowances between 2005 and 2007, which caused carbon prices to collapse….Meanwhile, some electric utilities received free pollution permits and were able to earn “windfall profits” from their good fortune. That appears to have been an error, too. There’s also the potential for fraud within the system. In theory, companies can get a pass on their pollution by buying carbon offsets—paying for projects elsewhere that reduce carbon, such as planting trees in Brazil. But these programs are often criticized for poor oversight (and some of them might have happened anyway). That needs to be reformed, too.

These are the kinds of problems any big new program has, and they’re being ironed out over time. But let’s look at the bigger picture: has ETS cut carbon emissions? The latest “Results and Lessons Learned” report from the Environmental Defense Fund has the answer. Without ETS, total European emissions would currently be around 2 billion metric tons per year. With ETS, emissions are around 1.8 billion metric tons. Still too much, but headed in the right direction. This stuff isn’t pie in the sky. We could do it if we wanted to.

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THE BIG PICTURE

You expect the big picture, and it's our job at Mother Jones to give it to you. And right now, so many of the troubles we face are the making not of a virus, but of the quest for profit, political or economic (and not just from the man in the White House who could have offered leadership and comfort but instead gave us bleach).

In "News Is Just Like Waste Management," we unpack what the coronavirus crisis has meant for journalism, including Mother Jones’, and how we can rise to the challenge. If you're able to, this is a critical moment to support our nonprofit journalism with a donation: We've scoured our budget and made the cuts we can without impairing our mission, and we hope to raise $400,000 from our community of online readers to help keep our big reporting projects going because this extraordinary pandemic-plus-election year is no time to pull back.

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