Establishing a Cap and a Price on Global Warming Pollution

Putting a cap and price on pollution is a critical first step and a major component in the mix of policies that will help build a prosperous low-carbon future. A price on pollution turns the negative environmental effects of carbon emissions into a real business cost for emitters, thus correcting a major market failure. A cap on emissions sets a clear goal and establishes a long-term signal in the market, encouraging innovation and allowing businesses to plan their investment strategies.

The American Clean Energy and Security Act proposes a cap-and-trade system as the mechanism to establish a cap and a price on greenhouse gas pollution. This system has the additional benefit of allowing companies to trade emissions permits, which results in the highest-emitting firms and industries buying permits from—and therefore investing in—the lowest-emitting, most efficient firms and technologies.

For more on this topic, please see:

• The Clean-Energy Investment Agenda, by John Podesta, Kate Gordon, Bracken Hendricks, and Benjamin Goldstein.