Politics and Policies

Definitions

Cap and trade (carbon trading) system

Cap-and-trade is a policy that is designed to "cap" greenhouse gas (GHG) emissions. The "cap" is a limit set by a government entity (such as the EPA) on any specific pollutant (such as GHGs). This cap is enforced by the entity selling permits to the GHG-emitting companies. These permits give allowances for a certain number of GHG emissions, or any other pollutant. Without a permit, a company cannot release GHG emissions. 

The "trade" part of the program is when companies are able to sell the allowances to other companies. For instance, if Company A has a permit but they manage to get their emissions below their permit allowances, they can sell the leftover part, allowance cheaply to Company B, who cannot afford lowering emissions. Over time, the cap limits are reduced in a specified fashion so that emissions are reduced. 

Over time, the cap limits are reduced in a specified fashion. This reduces emissions.

A cap-and-trade program also works in a less straightforward way. As the cap goes down, the price of the pollutant increases. When used for GHGs, particularly CO2, it sends a message to businesses telling them to invest in renewable energy technologies because of the rising prices.

Carbon tax and carbon dividend system

A carbon tax is a tax that a government puts on carbon dioxide emissions that fossil fuel companies would have to pay for every x amount of carbon dioxide they release. It puts a price on the environmental impact, sending a message telling companies that what they do has an impact. In addition, the company is forced to raise prices (not by the government, just to keep up with the cost), which makes the company unattractive for consumers. Consumers would then switch to a company that is, a) a cleaner fossil fuel company, or b) a renewable energy company. Either way, the dirtiest fossil fuel companies would mostly go out of business. Slowly, carbon taxes can wipe out the fossil fuel industry.

However, this "economic war" has negative impacts on customers. They are affected by the rising prices, so environmental groups and lawmakers came up with a carbon dividend system, which is exactly the same as a carbon tax system, but the money collected is not kept by the government, but rather returned to consumers in the form of dividends, usually every quarter. This makes back almost all if not all of the money lost back.

Climate Politics and Policies Planned and in Action

California
Targets
  • Reach carbon neutrality by 2050 (and 80%-95% emissions reduction)

  • Greenhouse gas emissions: 40% below 1990 levels by 2030

  • Transportation: Invent a 100% carbon neutral fuel by 2030

  • Greenhouse gas emissions: 1990 levels by 2020: COMPLETED IN 2016

  • Transportation: Reduce oil use in cars and trucks by 50% by 2030

  • Clean energy: 50% renewable energy by 2026

  • Clean energy: 60% renewable energy by 2030

  • Clean energy: 100% renewable energy by 2045

  • Energy efficiency: Double the efficiency of existing buildings by 2030

  • Energy efficiency: Make heating fuels more efficient

  • Greenhouse gas emissions: Reduce methane and hydrofluorocarbons to 40% below 2013 by 2030

Cap-and-trade program

Launched in 2013, California's cap and trade program is one of the largest in the world, and is expected to reduce greenhouse gas emissions by more than 16% by 2020, and an additional 40% by 2030. The cap and trade program is part of the state's emissions reductions target

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