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Allowance prices for carbon emission trade in all major emission trading schemes in Euro per ton of CO2 emitted (from 2008 until August 2024) Carbon emission trading (also called carbon market, emission trading scheme (ETS) or cap and trade) is a type of emissions trading scheme designed for carbon dioxide (CO 2) and other greenhouse gases (GHGs).
Cap and trade is the textbook example of an emissions trading program. Other market-based approaches include baseline-and-credit , and pollution tax . They all put a price on pollution (for example, see carbon price ), and so provide an economic incentive to reduce pollution beginning with the lowest-cost opportunities.
The European Union Emissions Trading System (EU ETS) is a carbon emission trading scheme (or cap and trade scheme) that began in 2005 and is intended to lower greenhouse gas emissions in the EU. Cap and trade schemes limit emissions of specified pollutants over an area and allow companies to trade emissions rights within that area.
The cap-and-trade program proposed by the legislation would reduce overall greenhouse gas emissions while generating revenue. A June 2009 analysis by the Congressional Budget Office (CBO) projected that the program would be deficit-neutral and would cost households an average of $175 per year.
Gov. Gavin Newsom says $11 billion spent through California's cap-and-trade program over 10 years represents the 'backbone' of state efforts on climate change.
The cap-and-trade program includes an enforceable emissions cap that will decline over time. The State will distribute allowances, which are trad-able permits, equal to the emissions allowed under the cap. Sources under the cap will need to surrender allowances and offsets equal to their emissions at the end of each compliance period.
The program, called cap and trade, was the first of its kind in the U.S. when launched in 2013 and set the ambitious goal of slashing turn-of-the-century emission levels by 40% by the year 2030.
Overall, the Program's cap and trade program has been hailed as successful by the EPA, industry, economists and certain environmental groups such as the Environmental Defense Fund, while skeptical environmentalists have argued that reduction in emissions occurred due to broad trends unconnected to the program. [36]