Cap and trade意思

"Cap and trade" is a system designed to reduce pollution, particularly carbon dioxide emissions that contribute to climate change. The term is a combination of "cap," which refers to the setting of a limit or cap on the total amount of emissions allowed from all regulated sources, and "trade," which refers to the trading of emissions permits or allowances among polluters.

Here's how it works:

  1. Setting the Cap: The government or regulatory body sets a cap on the total amount of emissions allowed within a specific geographic area or industry. This cap is typically reduced over time to achieve the desired environmental goal, such as reducing greenhouse gas emissions by a certain percentage.

  2. Issuing Permits: The regulator issues permits or allowances to emitters, which represent the right to emit a certain amount of the capped pollutant. Initially, the total amount of permits equals the cap on emissions.

  3. Emissions Trading: Emitters can choose to reduce their own emissions below their allowance or purchase additional allowances from other emitters who have reduced their emissions more than required. This creates a market for emissions, where the price of allowances reflects the cost of reducing emissions.

  4. Incentive to Reduce Emissions: Firms that can reduce emissions at a lower cost than the market price of allowances have an economic incentive to do so, as they can sell their surplus allowances at a profit. This creates a market-based incentive for companies to invest in cleaner technologies and more efficient processes.

  5. Flexibility and Innovation: The cap and trade system provides flexibility to emitters, allowing them to choose the most cost-effective ways to reduce emissions. This can lead to innovation in technology and business practices that go beyond the minimum requirements.

  6. Revenue Generation: Depending on the design of the system, cap and trade can generate revenue through the sale of allowances. This revenue can be used for various purposes, such as funding research and development of clean technologies, supporting energy efficiency programs, or compensating individuals or communities affected by the transition to a low-carbon economy.

The cap and trade concept was successfully implemented in the United States for acid rain control under the Clean Air Act Amendments of 1990, and it has been adopted in various forms by several countries and regions around the world, including the European Union's Emissions Trading System (EU ETS) and the California Cap-and-Trade Program.

The effectiveness of cap and trade systems depends on several factors, including the stringency of the cap, the coverage of the regulated emissions sources, the efficiency of the market, and the ability of the system to adapt to technological and economic changes.