My name is Sara and I'm a sophomore Econ major. Not surprisingly, it was in one of my Econ classes that I first learned about the cap-and-trade policy and what it hoped to accomplish. The reality behind cap-and-trade is that it is a market based solution to our current environmental crisis. The policy involves putting a "cap,"or a limit, on the amount of a pollutant that can be emitted. Pollution permits allowing for a certain amount of pollution are then distributed to firms who can use or "trade" their permits. This allows firms that can easily and cheaply cut back on their emissions to trade their permits to companies where it is much more difficult. This connects to economics because ultimately a market will develop for these permits in which those who value the permits at the highest price will get them while those who value it less will be able to sell their permits. Many believe this system will be effective because it allows the US to continue production, while still cutting back on emissions. According to the New York Times "cap and trade" overview, the original cap-and-trade bills hoped to reduce carbon dioxide emissions by 83% in 2050. Furthermore, some economists believe that this is "the lowest-cost solution to a global pollution problem" and will be more effective that taxing polluters (New York Times). This bill has already been passed in the House but has not yet been approved by the Senate. One of the biggest debates surrounding the bill is how the permits would be distributed to the companies (New York Times). Some are in favor of selling the permits while others propose just giving them away. While this issue has not yet been resolved, it is one that we will hopefully be able to monitor throughout our blog.
Feel free to check out the link to learn more about the policy. Any comments and corrections on what I've said are welcome as well. One of the reasons I decided to join this blog was to learn more about cap-and-trade and other environmental policies that are in the works, so don't hesitate to help me out!
Sara McKnight
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