Issue Briefs

In November 2012, California’s Air Resources board auctioned off the first round of carbon permits for its voluntary cap-and-trade market, which officially went live on January 1, 2013. This initiative came out of California Assembly Bill 32, the Global Warming Solutions Act, which sets a goal of lowering greenhouse gas emissions to 1990 levels by 2020 (a reduction of about 30 percent).

During the 111th Congress, as legislators debated ways to cope with climate change, the flaws of cap-and-trade approaches doomed the attempt to pass the American Clean Energy and Security Act. A final push came in the form of a different bill. Senators Maria Cantwell and Susan Collins introduced S.2877, the “CLEAR Act,” which rested on a principle called cap-and-dividend. Although cap-and-dividend avoids the pitfalls of trading credits and offsets, it still relies on a market solution for pollution that upends our commitment to stop pollution and protect our families and our environment.

The last 20 years of environmental protection have seen a steady shift away from many of the tried-and-true regulatory control approaches that force industries to implement increasingly more protective pollution abatement measures. We are witnessing a move toward market-driven off set programs that substitute trading for technology. With both air and water, industries are now being offered pay-to-pollute approaches that enable them to purchase pollution “credits” instead of working to reduce their harmful discharges. Of course, these market mechanisms come with a whole host of loopholes and liabilities.

Whenever you read a report or hear on the news that the economy is growing, what you are hearing is that the Gross Domestic Product (GDP) is growing. But while GDP measures economic activity, it does not measure the distribution of the wealth created by that activity, or the quality of our air and water, or the quality of our schools. Yet, when we hear GDP is growing many of us believe that the country is doing better than it was. Given that economists, politicians and the media treat GDP this way, it is no surprise that we think this way.