Last week, Bill Chameides, chief scientist at Environmental Defense, talked with Ira Flatow on National Public Radio’s Talk of the Nation: Science Friday about market-based policies to cut carbon dioxide (CO2) emissions, a big contributor to the global warming problem.

Chameides argued that the fastest, most cost-effective way to reduce CO2 emissions is with a policy called cap-and-trade. This system tells big emitters – like powerplants, automobile manufacturers, etc – that they have to cut their CO2 emissions by a certain amount by a certain date. For companies that make deeper cuts than what is required, a credit is issued and can be traded (sold) to other emitters that don’t meet the targets. With this system, explained Chameides, government plays “a fairly light role” by ensuring that technologies are valid and are reducing emissions, while carbon dioxide becomes a commodity and sold on the open market. Companies are rewarded for innovations that take them beyond targets set by lawmakers.

Cap-and-trade isn’t a new concept: A cap-and-trade policy was enacted with the 1990 Clean Air Act amendments to cut emissions that cause acid rain. According to the current Bush Administration, the cap-and-trade system has been a “resounding success,” cutting annual sulfur dioxide emissions ahead of target dates and at one-third of the expected cost.

When a caller pointed out the lack of action from the federal government on CO2, Chameides noted that states have taken the initiative. For example, the Regional Greenhouse Gas Initiative (RGGI) is an effort by Northeastern and Mid-Atlantic states to reduce CO2 emissions. RGGI employs a multi-state cap-and-trade program and requires electric power generators to make the cuts. California is also implementing a cap-and-trade system (one that targets all big emitters, not just the electricity sector, and which covers all six major global warming gases, not just CO2), and Europe’s cap-and-trade came into effect over two years ago. As important as it is for states to forge ahead, Chameides is concerned that without leadership from the federal government, we won’t get the cuts we need and we’ll fall behind in renewable energy innovation:

“Europe is way ahead of us in renewable energy technology and that’s where we’re really going to have to play catch up…If we wait long enough, we’ll have to be an importer of these technologies instead of an exporter.”

There are several bills in Congress that have cap-and-trade policies, and many see a “clear preference” for this approach among utilities, compared to a carbon tax. In fact, 91 percent of California businesses in one survey responded that a cap-and-trade policy was the best way to meet CO2 reduction goals. Chameides argued that a carbon tax – besides being “a political nonstarter” – doesn’t allow for measurable reductions, and the government sets the price on CO2 rather than the marketplace. The best way to slow global warming, spur technological innovation, boost our economy, and clean up our environment is with a measurable, market-based system like cap-and-trade.

UPDATE: See Maria Energia for another point of view: Fareed Zakaria of Newsweek argues that a global carbon tax is the most efficient, market-friendly way to cut emissions that cause global warming.

Business Wire, via Find Articles
Climate Action Network Europe
MarketWatch
National Public Radio
Regional Greenhouse Gas Initiative
Terra Daily
WhiteHouse.gov