Cap & Trade

Cap and Trade 101
Pew Center Brief

A variety of policy tools exist to reduce the greenhouse gas emissions responsible for climate change, one of which is a cap-and-trade system. Resources accessible on this page help explain what cap and trade is and how it works to address the climate change challenge.

A cap-and-trade program sets a clear limit on greenhouse gas emissions and minimizes the costs of achieving this target. By creating a market, and a price, for emission reductions, cap and trade offers an environmentally effective and economically efficient response to climate change.

Ultimately, cap-and-trade programs offer opportunities for the most cost-effective emissions reductions. Many challenging issues must be addressed before initiating the program. Once established though, a well-designed cap-and-trade market is relatively easy to implement, can achieve emissions reductions goals in a cost-effective manner, and drives low-greenhouse gas innovation.