‘Cap and trade policies are increasingly being implemented by governments and within industry as a way to reduce their carbon emissions. ‘Cap’ involves setting an upper limit that a country or government can emit, and ‘trade’ involves paying others to cover your excess. Instead of spending money cutting their own emissions, it allows governments and companies to pay someone else to cut their emissions, which costs them less.
While reducing greenhouse emissions is not mandatory in the US, since it has not ratified the Kyoto Protocol, voluntary trading proves to be big business. Also, Barack Obama has included revenues from a proposed cap-and-trade scheme in his 2010-2014 budget.
Low-emissions energy production is one area that will grow considerably under this scheme. Although nuclear energy appears to be the only viable alternative at present, and many think it will be the unexpected winner of the situation, other alternative technologies are likely to grow.
In the UK, which does have a cap and trade policy, alternative energy technologies have advanced. A large-scale engineering project is underway in the form of ‘Wave Hub’, aiming to create the world’s first large-scale wave energy farm. Existing firms are also diversifying to provide alternative-energy technologies, such as OGI Groundwater Specialists Ltd, who have become specialists in the installation of Ground Source Heat Pumps, which provide heating with 40% of the carbon emissions of conventional heating.
Implementing ‘cap and trade’ policies will cause low-carbon energy technologies to advance as countries and companies try to reduce their emissions score.
References
BBC News, “Q&A: The Carbon Trade,” BBC News Business, 2006. Web.
The Economist, “Whom the cap fits,” The Economist, vol 390, #8621, pp. 38-39, 2009.
K. Johnson, “Nuclear Obama: Will Cap-and-Trade Plans Spur Nuclear Revival?” The Wall Street Journal, 2009, [Online], Web.
Department for Business, Enterprise and Regulatory Reform, “Low Carbon Industrial Strategy: A Vision,” HM Government, 2009. Web.
Wave Hub, “Wave Hub Project”, South West of England RDA, 2009, [Online], Web.
OGI Groundwater Specialists Ltd, “Geothermal Heating & Cooling from OGI”, OGI Groundwater Specialists Ltd, 2007, [Online].