Cap and Trade

Cap and Trade 101
Pew Center Brief [1]

A cap-and-trade system is one of a variety of policy tools that exists to reduce the greenhouse gas emissions responsible for climate change. 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.

Cap v. Tax
Pew Center memo [2]

Cap and trade and a carbon tax are two distinct policies aimed at reducing greenhouse gas (GHG) emissions. 

This memo explores both the fundamental similarities between cap and trade and tax regimes, but also the important differences between them.

Putting a Price on Carbon: An Emissions Cap or A Tax? [3]
Yale Environment 360 opinion feature
May 7, 2009