Cap And Trade Flashcards, test questions and answers

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What is Cap And Trade?

Cap and Trade is a policy designed to reduce the emission of greenhouse gases into the atmosphere. It is based on the idea of setting a cap on emissions and then allowing companies to trade or purchase permits that allow them to emit a certain amount of carbon dioxide or other pollutants. This system creates an incentive for companies to find ways to reduce their emissions, as they will have an economic benefit from doing so.The idea of cap and trade was first proposed in 1989 by noted economist Robert Stavins, who proposed it as a way for countries around the world to work together in reducing emissions without creating too much economic disruption. The concept has since been adopted by many countries around the world, including the United States and parts of Europe. In fact, many countries are now using or considering using some form of cap and trade system as part of their efforts to meet their commitments under the Paris Agreement on climate change.Under a cap-and-trade system, governments set an overall limit (or cap) on total greenhouse gas emissions allowed within its jurisdiction each year. Companies buy allowances that allow them to emit up to a certain amount when they exceed their allocated allowance limits they must buy additional allowances from those below their limits (the trade). This creates an economic incentive for companies emitting high levels of pollution such as coal-fired power plants since if they do not reduce their emissions, they must purchase more allowances than those with lower polluting sources such as renewable energy sources like wind and solar power. Over time, this process should lead more businesses towards cleaner production methods that generate fewer harmful emissions over time.Cap and Trade is considered one of the most successful climate policies in existence today because it helps keep global temperatures from rising while also providing incentives for businesses looking to invest in clean energy technology development which can help create jobs while also reducing pollution levels at home or abroad depending on where these investments take place geographically speaking too. As more countries join forces with this powerful tool we will continue seeing positive results across all areas – not just environmental but economic ones too.