Sunday, October 19, 2008

Cap and Trade On A Sunday Afternoon

Our Canadian Federal Election just ended and during the various campaign debates we heard much about climate change, greenhouse gases and some potential solutions. One of the solutions that received much attention was Cap and Trade.

While I understand the basics of Cap and Trade, but I wonder how many others out there understand the basics. During my Sunday afternoon research I found an excellent guide to Cap and Trade, or Cap and Trade 101 if you will. It was just published in September of this year by the Sightline Institute in Seattle.

Cap and Trade programs can all work differently and the Sightline Institute does a great job of explaining how they work and the basic mechanics of it all. To get on a real basic level here, here's how it works:

  1. The government sets a legal limit on all measurable greenhouse gas emissions they will allow.
  2. To aid this strategy, there are a number of other programs like investing in transit, higher efficiency standards for motor vehicles manufactured, and other "green" programs.
  3. Over time the legal limit is diminished and we move into a tighter cap.
  4. If a company needs to emit more than their permissible limit of greenhouse gases, they use the "trade" part of this solution that will "permit" them to do so. Their pollution will cost them. Read the guide to see more of how this works.
We should point out that not all Cap and Trade programs are created equal, and their are other methods. Perhaps in future blog posts we will explore the other solutions. OR, if you are a ready and have a passion for one of these other methods, perhaps you can submit a draft to us for possible publication. We are always open to "guest bloggers"!

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