Cap and Trade Makes a Comeback

by | Aug 18, 2010

Many of us thought that earlier this year we saw the end of cap and trade. But with the oil disaster, cap and trade is poised to make a big comeback. But is emissions trading the answer or just a Band-Aid on a bullet hole?

Though there has been a great deal of debate surrounding cap and trade in its most recent context of carbon trading, cap and trade in history has had its successes. It all started back in 1988 when former President George H.W. Bush came into office in the midst of a major environmental issue, acid rain—rain that was laden with sulfur dioxide seemingly from power plants burning coal. Bush, who billed himself as the “environmental president,” took action and in 1990, worked to pass the Clean Air Act. The Act provided provisions for emissions trading that were supported by many on both sides of the aisle, because it was seen as a way to allow free markets the ability to determine the cost of emissions and gave the market a way to reach the government’s environmental goals.

Today it seems allowance trading is making a comeback. Over the next few months, expect a number of proposals to be presented on the Hill and in the media. Specifically who and what cap and trade will affect and how much it is going to cost is the big question.

There are some challenges. As cap and trade of the 90s was successful in reducing the amount of sulfur dioxide in the air, we can assume that the carbon cap and trade of today should be effective at curbing our carbon habit. But we cannot fall into a false sense of security, believing that regulating carbon will solve all our problems. Where the Clean Air Act was a good start, it wasn’t a full team effort. It only solved one distinct issue. Like a baseball game, a team needs to have players covering each position. If you have a strong pitcher but are weak at all of the other positions, you are bound to lose games. The Clean Air Act was one player, the capping of carbon may be another – but even combined, the two are not enough.

In order to solve the environmental issues our world is facing, it is necessary to look at the whole problem, not just the parts. We have more issues than just carbon. There are hundreds of other pollutants out there. Species are falling like dominoes, our consumption continues to increase, and the price we are paying for products does not accurately reflect the true costs on our environment, the impact to the people who manufacture our goods and the destruction of the ecosystems being stripped of natural resources. Take, for example, the spill in the Gulf: If the damage was to be measured by the traditional carbon footprint, the spill’s impact would be minimal, and we all know this is not the case. This is the challenge in measuring only one variable: it is impossible to see the entire reality.

What we need are environmental czars, people appointed by government and industry that are actively involved in the business and bureaucracy of sustainability, and that have the interest of future generations at heart.

We need players on every base, in the outfield and in the bullpen taking a team approach to our consumption-based economy and helping us move through regulation and innovation into the next millennia. Continuing to focus the market on one item at a time in a very complex hierarchy of issues creates a lopsided strategy. With this approach at the end of the day we have trained the market to respond to only one stimulus and have just one specialty. (Imagine a baseball team comprised of great pitchers with no one to catch.)

Balance is key, and the only way it will come is through looking at our environmental issues collectively and creating strategies that move the entire market forward simultaneously. Unfortunately, this is about as easy as creating a world class baseball team — but just because the road is hard does not mean we should stall the journey.

And harder yet may be convincing Washington to act as referees and not to suit up and play the game.

Derrick Mains is the CEO of GreenNurture, the corporate sustainability software company. harnesses the collective intelligence of employees to drive sustainability efforts forward around social, environmental and financial performance. The resulting analytics provide the necessary intelligence for decision-makers and offer transparency to stakeholders. Mains can be reached at and followed on Twitter at @enviralmentalst.

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