Magazine article Foreign Policy

Capping It Off

Magazine article Foreign Policy

Capping It Off

Article excerpt

"Cap and trade" began not as a catchphrase, but as a simple concept: that the market could help curb pollution. Its roots date to the 1960s, when U.S. government scientists came up with a scheme for regulating sulfur dioxide emissions through setting a cap and then trading the right to emit over the limit. By the 1970s, environmentalists--and their politician allies--embraced the concept, and it became standard in regulatory legislation. Now, as climate change makes the regulation of carbon emissions crucial, cap and trade may be more necessary than ever, if global wrangling doesn't do it in first.

1967

Ellison Burton and William Sanjour, two computer modelers for the U.S. National Air Pollution Control Administration, imagine cap and trade (though not the term) as a way to cut down sulfur dioxide emissions from power plants.

1968

University of Toronto economist John Dales publishes Pollution, Property and Prices, proposing an intellectual framework for emissions trading. He and another early architect of the idea, economist Thomas Crocker, later express skepticism that cap and trade can be successfully used to regulate carbon.

1976

U.S. states have difficulty meeting the targets imposed by the 1970 Clean Air Act, so the Environmental Protection Agency (EPA) allows certain environmental improvements, or "offsets," a company can make to help meet its targets. The idea is incorporated into the 1977 Clean Air Act amendments, sponsored by Rep. Paul Rogers (D-Fla.).

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1980s

The EPA and the U.S.-based Environmental Defense Fund (EDF) push for cap-and-trade programs to phase out lead in fuels and control the sulfur dioxide emissions that cause acid rain. Both programs are successful. Meanwhile, European countries move to taxation to regulate emissions rather than cap-and-trade systems.

1990s

China begins to experiment with a cap-and-trade system to cut down on sulfur emissions from power plants.

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OCTOBER 5, 1994

EDF becomes among the first to coin the phrase "cap and trade." The group's attorney, Joseph Goffman, testifies before the U.S. Congress that a "'cap-and-trade' regime...illustrates a compelling strategy for internalizing the environmental costs of energy and electricity production. …

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