Photo Credit: RybsonChances are that you've heard the phrase "cap and trade", and that you know it's a proposed way to reduce greenhouse gas emissions. You probably also know that there's some controversy about it - one of the major Conservative talking points about Cap and Trade, for instance, is that it will add thousands of dollars a year to the average family's energy bills. That figure is still under considerable contenton - and it doesn't take into account that those added costs would be "front-loaded" - sorta the way that you pay for a new furnace all at once, so it adds several thousand dollars to your heating bills for the first year or two - but it also reduces your ongoing energy costs. Eventually, you're done paying for the improvement to your heating system - and have actually got that money back because you're paying LESS for your heating/cooling every month.

But I've got off track here. What I wanted to do in this post is talk about what's a cap, what's a trade, and how is it supposed to reduce global warming. So here goes - quick, simple answers to some not so simple questions.

What is "cap and trade"?

Cap and trade is a series of regulations that encourage businesses to reduce the amount of carbon emissions they release into the atmosphere. Capping emissions is nothing new - the U.S. government did it in the 1990s to reduce sulfur emissions, for instance. Cap and trade would set a goal for the total amount of carbon emissions allowed into the atmosphere, and then auction off "permits" to companies that pollute. In a model cap and trade program, each permit would allow a company to emit one ton of carbon emissions into the air. Companies would purchase permits to cover the amount of carbon emissions that they put out. If they put out more than their permits allow, they'll be penalized.

Okay - what about the "trade" part?

The model program would allow the companies involved to trade/sell permits among each other. That means that a company with lower carbon emissions or more efficient energy use could sell their permits to a company that uses more "dirty" energy. The key to cap and trade would be that the total number of permits - and thus the total amount of greenhouse gasses emitted - would remain the same. The difference would be in the distribution and the flexibility it gives companies to make changes in energy efficiency on a timetable.

How does it help reduce carbon emissions and slow global warming?

Cap and trade is a market-driven solution to carbon emissions. Basically, companies that emit carbon gasses would pay for the amount of carbon gas that they dump into our air - which will encourage them to reduce the amount of carbon emissions in order to reduce their expenses.

Won't that make energy more expensive?

I guess that depends on how long a view you take and what you consider "energy". Energy that depends on carbon fuels -oil and coal, for instance - will certainly become more expensive - that's part of the goal. The intent is to push the development of greener energy sources. The faster energy companies make the switch to renewable, green sources of energy, the more it will cost them up front, but the sooner those new energy sources will become viable.

See, a big part of the reason that we're still using the old legacy forms of energy like coal and oil is that it's cheaper to keep doing that - in the short run. It's all stasis - we know how to do this, we have a lot invested in doing things this way, and we don't want to change the way we do things because it will cost us money up front.

Part of the idea behind cap and trade is to make our current energy sources more expensive and spur the development of green energy by making it less expensive. Other complementary measures will also be in place to spur green energy production - things like money available for job re-training for those who will lose jobs in the coal and energy industries, like subsidies for those who make energy-efficient changes to their production and facilities, and grants to those who are developing green energy sources and delivery systems.

$3,120 a year? Really??

One of the figures that's been floated by the opponents of cap and trade is $3,120. That's the amount that conservative talking point memos say it will cost the average family every year in increased energy and other costs. That figure was pulled from a report/study done at MIT. The author of the study has contested that, claiming that the figure was taken completely out of context and includes figures that shouldn't be in there. One writer claims that since then, the study author has reversed himself and admitted that it may be a fairly realistic figure. They also claim that he had been "miscategorizing" costs as "investments".

And that's where I go back to my opening paragraph, about putting in a new furnace. If you only look at the costs for the first years when you're still paying for the changeover to greener, more efficient and more sustainable energy sources, then it's an expense. I've never been one to take a short range view of things, though. I pay more for my coffee because I believe in economic justice and reduction of global warming, and I don't mind paying more for my heating, cooling, electricty and other things - especially in the short term - if it means that in the long term, my kids will have a safer, more beautiful world.