Introducing the Natural Resources and Electricity Cap-and-Trade Act
by David Shreve
In cap-and-trade systems, the government places a “cap,” or limit, typically on pollution or resource extraction. The amount of pollution or extraction is then divided into “allowances,” which are allocated to the polluting or extracting corporations. These corporations can trade their unused allowances in the marketplace.
Cap-and-trade policies promise significant abatement at an optimally low cost. But does experience with cap-and-trade systems vindicate this promise?
The United States and other countries have tested a variety of cap-and-trade systems.