Originally published on the CGS blog on October 21, 2009.
A key component of the Boxer-Kerry Bill is a policy called “cap-and-trade.” “Cap-and-trade” is a method that provides an economic incentive for the greenhouse-gas-emitting entities to reduce their emissions. More specifically, the policy identifies the entities and gives them a set allowance for their emissions. The sum of all the greenhouse gas emitted by all the entities equals the national cap. In return, the entities are allowed to trade their allowance credits amongst themselves for a profit.
While the Boxer-Kerry Bill includes this policy, it shies away from the term “cap-and-trade,” referring to it instead as the “pollution reduction and investment” program. Why did they change the wording of the policy? A historical analogy of the policy to the Slave Trade Act of 1807 may provide a clue. This act abolished the Atlantic slave trade, yet did not abolish the act of slavery itself. Thus, no more slaves could enter America, but the preexisting slaves could be traded amongst the plantation owners as much as they pleased. Sounds very similar to a “cap-and-trade” policy. This allows a possible comparison between the two, as they could be viewed as easy ways to deal with external pressure while really ignoring the larger issues at hand. This analogy may explain why the Boxer-Kerry Bill has avoided the term “cap-and-trade.” Avoiding the term may mean avoiding the comparison. And they don’t want to be viewed as taking the easy way out. Smart move.
Yet, despite the negative associations with the term “cap-and-trade,” it is important to note that the policy has the potential for success. There are several historical examples of successful “cap-and-trade” policies, including the Clear Air Act Amendments. These were passed in 1990 by George H.W. Bush in an effort to reduce sulfur emission as the effects of acid rain were brought to the public’s attention. Just like in the Boxer-Kerry Bill, each sulfur producing entity was assigned a cap, but they were allowed to trade or sell unused allowances for a profit. This program was extremely success. It received 100 percent compliance in reducing sulfur dioxide emissions and by 2002, sulfur emissions were 41% lower than in 1980.
Thus, the “cap-and-trade” policy of the Boxer-Kerry Bill has great potential for success. Past “cap-and-trade” policies on the environment have been very successful, despite certain negative historical associations with the term. It is important to look past the term and see the policy in all its potential. Yet, the bill faces strong opposition that does not need more fuel for its fire. Using the term “pollution reduction and investment” rather than “cap-and-trade” definitely won’t hurt. After all, no bill wants to be compared to a slave law.
