Following one of my comments on the previous grey-water thread regarding cap and trade policies and new legislation aimed at regulating carbon emissions, I wanted to post a relatively elementary primer - hence "Cap and Trade 101" - (h/t) to aid your understanding of this potentially complex subject.
I've encountered no better or more thought provoking discussion of the Cap and Trade proposals than the Obsidian Wings post from March 6, 2009 to which I linked in comments yesterday. It's author, who goes by the pen-name hilzoy, is a Ph.D. tenured professor of bioethics and one of the most facile thinkers and persuasively progressive writers currently illuminating the blogosphere. If you haven't looked into the thread, here's the link once again: Don't Give Away Carbon Permits.
What is Cap and Trade?The goal: To steadily reduce carbon dioxide and other greenhouse gas emissions economy-wide in a cost-effective manner.
The cap: Each large-scale emitter, or company, will have a limit on the amount of greenhouse gas that it can emit. The firm must have an “emissions permit” for every ton of carbon dioxide it releases into the atmosphere. These permits set an enforceable limit, or cap, on the amount of greenhouse gas pollution that the company is allowed to emit. Over time, the limits become stricter, allowing less and less pollution, until the ultimate reduction goal is met. This is similar to the cap and trade program enacted by the Clean Air Act of 1990, which reduced the sulfur emissions that cause acid rain, and it met the goals at a much lower cost than industry or government predicted.
The trade: It will be relatively cheaper or easier for some companies to reduce their emissions below their required limit than others. These more efficient companies, who emit less than their allowance, can sell their extra permits to companies that are not able to make reductions as easily. This creates a system that guarantees a set level of overall reductions, while rewarding the most efficient companies and ensuring that the cap can be met at the lowest possible cost to the economy.
As you'll gather from the Obsidian Wings discussion, Cap and Trade is conceptually simple but the nuances can puzzle. That said, however one looks at it, Cap and Trade will never be more than a short term, stop-gap GHG-pollution mitigation effort. Because it's energy source is nonrenewable and its aim is not sustainability, Cap and Trade is, at most, a temporary band-aid on a critical major hemorrhage.