The Cap and Trade Program Sample

The Cap and Trade Program Sample

In all states of America policies have been formulated to reduce the rate at which human activity is degrading the environment. The state of California has been on the front line for a long time in formulating environment related policies. This state has formed a number of policy borads meant to look into environmental matters. One of such boards is the California Air and Resource Board. The California Air Resources Board (CARB) initiated efforts towards reducing greenhouse gases (GHG) to lower levels that were experienced in the year 1990 by the 2020.  Considering the present rates of emissions, this would translate to a significant reduction of GHGs emission by 30%. The “cap and trade” program is geared towards achieving this noble goal by simply offering incentive to major emitters of GHGs (Air Resouces Board 2011).The Cap and Trade Program Sample


Green house gasses are emitted by many sources, both point and non-point sources, with the large emitters being more responsible for their continued rise in the environment (Simon 15). Permits are issued to the polluting utilities by the state, at specified emission limits; the utilities comply to emit less than the outlined emission limits. In these regard, the large power plants, production industries and factories in California are the targets in this program, and financial incentives are offered to them in exchange for reducing the total emissions (Malone 4). These major polluters are also encouraged by the same strategy to participate in efforts aimed at mitigating climate change and global warming; particularly illustrated by the buying of carbon credits. The “cap and trade” program has entrenched in California’s AB 32; an environmental law on global warming. It further augments efforts of ensuring environmental quality within the state as outlined by California Environmental Quality Act (Ferrey 176).

Origin of the program

Global concerns about global warming and it’s predicted adverse environmental effects, particularly climate change, have continued to grow, subsequently leading to the generation of various environmental measures to mitigate against this global issue (Simon 12).  The “cap and trade’ program arose out of this need and was geared towards significantly reducing GHGs emissions within the state. Attaining the set goal of reducing the emissions was considered alongside other measures including relying less on fossil fuels by adopting renewable energy, efficient use of energy, and use of low carbon fuels.

Lack of clear national goals on reducing GHGs emissions coupled with the rising concerns raised by environmental lobby groups, led CARB to come up with this program in conjunction with other states within the western climate initiative. What the lobby groups and other interest groups realized is that the rate at which environment was being degraded was alarming. It was predicted that global warming’s adverse effects would adversely affect every sector of the economy and so it was felt that there was need to act. It is from this need that the California Air Resources board was formed.The Cap and Trade Program Sample

GHGs Emission

The program works by offering financial incentive to the major pollutants within the state that comply in reducing their emissions to levels set by the state. These levels are set by the environmental authorities within the state as mandated by Environmental Quality Act. Anthropogenic sources of pollution are identified as both point and non point sources. The program aims to target the easily identifiable point sources outlined as the major production industries and power plants within the state. Non- point anthropogenic sources of greenhouse gases are significantly tougher to regulate, such as emissions from vehicles using fossil fuels (Simon 23).

The program cannot adequately respond to this challenge at the points of pollution, but can counter this at the factory level, by encouraging the oil processing industries to reduce carbon amounts in the fuels. Cap and trade program, encourages all efforts undertaken to reduce GHGs emission and measures geared towards mitigating global warming, and in this way significantly reduces emissions from human activities (Runyon 2010). Both programs have been tested and proven to be effective in maintaining high quality of environment. The two serves their purpose by either deterring polluters through the reduction of human activities that are deemed to have unfavorable effects on the environment.

Advantage and Disadvantages of the program

“Cap and trade program” has the advantage of addressing the emission problems at the major points of pollution. Limits set by the state clearly mark the ceiling to which the major emitters can produce. Setting these limits also offers quantifiable targets that the emitters can strive to achieve (Ferrey 134). Offering financial incentives as reward of meeting the stipulated amounts adds to the motivation of the polluters to meet the targets.  In targeting the major polluters, the program ensures large amounts of emissions can be reduced; a significant factor towards arriving at the 1990 levels by 2020. In addition to these advantages, the program is backed by the environmental laws stipulated in AB 32, and penalties can be administered to those not complying with the set GHGs emission rates (Air Resouces Board 2011).The Cap and Trade Program Sample

On the other hand, the program has its disadvantages. It does not set specific limits to the polluting companies and neither does the program describe strategies and plans that these polluters can apply in order to reduce emission of carbon dioxide and other GHGs. These decisions are left to the polluting companies. Another aspect on its disadvantages relates to trading of carbon credits which can be abused by these companies.

Future of the program

Under this program, California Air Resource Board has projected GHGs emissions to drop by a margin of 80% by the year 2050 (AirResoucesBoard). It does not only set out the state’s dreams of achieving a higher quality of environment for its residents but also sets out the path that can be adopted by other states. In spite of its ideal goals the program faces challenges that should be addressed first before its full adoption and operation within the state. Regulators of air quality need to “properly consider alternatives” of the programs to ensure it can operate in the current and future circumstances (Runyon 2010). CARB can ensure it works by “conducting further review before implementing the plan”, which does offer a lot in the fight against global warming and climate change (Dearen 2011). Without addressing these problems, especially the possibility of abuse, this vital program would in essence be obsolete, in spite of its upper hand in reducing GHGs emissions.The Cap and Trade Program Sample

Comparisons with other programs

Other programs with the same aim of reducing GHGs emission exist including the Western Climate Initiative (WCI) and the Regional Green House Gas Initiative (RGGI). These two programs are driven by regional concerns on GHGs emissions. The cap and trade program operates within the state of California, while the other initiatives outline these efforts over a number of states. The RGGI initiative works by “having each state set its own independent regulations” (Runyon 2010). These regulations have to be based on the “RGGI model rule”; this way ensures collective responsibility to these efforts. WCI also ensures aggregation of measures of reducing GHGs emission measures in the involved states, by developing market based approaches in various sectors projected to have significant impact in reducing these emissions. In achieving this goal, WCI and RGGI involve a wider consultations and participation across borders at levels higher than the cap and trade program.


Potential problems

Productivity and environmental quality are inversely related. It is always certain that if economic productivity goes up, then certainly the quality of environment gets negatively affected. If any measures meant to control, environmental degradation are to  be introduced, it then means that companies, big or small, have to cut down on production. It is this fact that poses lots of challenges to any policy meant to improve environmental quality. Possibility of being abused by the polluting companies however, makes the Cap and trade program require further reviewing to avoid these unethical practices. Companies can buy acquire the permits from the state and then purchase carbon credits from other projects that are located elsewhere within the state (Runyon 2010). This would lead to continued pollution by the industries and companies with the pretext of having these amounts of GHGs offset by their trading in carbon credits.The Cap and Trade Program Sample

Human populations living around these companies, who are mainly composed of the poor class, will be subjected to a poor quality of environment from the emitted pollution (Dearen 2011). Investing in mitigation measures and projects located elsewhere only serves to further deny these people a better quality of life. In addition to this type of abuse, the program is also perceived by many as giving leeway and unlimited freedom to the polluting companies to continue with their operations and harmful emissions of GHGs as long as they pay taxes to the government. The bottom line here is that, there will be unethical issues that will arise. Big companies may take advantage of the situation while those living near these companies may have to be affected by having to dwell in polluted environment.The Cap and Trade Program Sample

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