What is: Cap-and-Trade & C.A.F.E. Standards

The goal of Cap-and-Trade is “To steadily reduce carbon dioxide and other greenhouse gas emissions economy-wide in a cost-effective manner.” With the Cap-and-Trade system the cap would require limits on howmuch greenhouse gas is to be used per firm. For every ton of carbon dioxide each firm releases into the atmosphere, an “emissions permit” would be required. These permits set caps on the amount of pollution emitted per business. The limits continue to stricken over time, preventing more and more pollution until the goal of reduction is reached.

Because different companies will be more profitable than others, some will be able to afford more or less permits for the emissions. Coherently, the incentives to trade emission permits would be self evident, hence “Cap-and-Trade”. In this system, there would be guaranteed levels of reduction in greenhouse gas emissions, and would reward more environmentally savvy companies financially.
The federal government hopes to auction the emissions permits to firms, and use the profits to tend to other policy objective projects related to climate change. Because this is only a suggested alternative in conjunction to bailing out more companies from financial hardships, it is not certain as to how and where 100% of the profits would be distributed.

In conjunction to Cap-and- Trade , rising C.A.F.E. standards are being debated. C.A.F.E.(Corporate Average Fuel Economy) standards are federal government regulations placed on firms with the intention of improving the average fuel economy of cars and trucks sold in the United States, throughout the peak of the Arab Oil Embargo of 1973. Companies that are affected by this are car makers. Though there is some agreement among voters and policy makers that C.A.F.E. goals are necessary, the trivial question continues to be “are the rising C.A.F.E. standards the right way to reach the goal of improving fuel economy on vehicles?”.