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Adapting and Thriving in a Cap and Trade Society

Posted Feb 14th, 2017

Adapting and Thriving in a Cap and Trade Society TERESA MADALENO 

The province of Ontario has adopted a cap and trade system and business owners have been stressing about how to adapt to it. Like most new rules, regulations or policies, education is the key. Many who do understand cap and trade say for industries already struggling with operating costs it is simply “fear of the unknown”, but they want them to see that knowledge in this case literally equals “power”.

Under cap and trade, industries have emission limits called, “Caps”. The industries that pollute less can sell or trade their credits. Over a period of time, an industry’s overall cap is lowered to decrease emissions. This creates an economic incentive to lower emissions.

According to news reports, the Ontario government expects their program to bring in 1.9 billion per year to go towards the promotion of green conservation.

Global climate experts state that the “trade” part of the system gives companies a lot of flexibility. It increases available capital to make reductions, it encourages companies to reduce pollution faster, and it rewards innovation. In many ways, the cap and trade system lets the market find the most cost-effective method to cut emissions.

As pointed out by the Environmental Defense Fund, when companies adopt energy-efficient technology, businesses can see more opportunity. For example, there was a time when acid rain was constantly in the headlines but electric utilities developed new and cheaper ways of burning lower-sulfur coal and made pollution control equipment much more efficient. They were able to cut sulfur dioxide levels at a cost below what was projected. We don’t hear much about acid rain anymore do we?

Cap and trade proponents admit that investment in new technology does come with a price, but argue it is often a case of short-term commitment for long-term gain. That gain not only comes in the form of financial savings, but also a cleaner environment.

A decade ago, fear was also a common denominator in California. Today the U.S state is the leader when it comes to cap and trade. The California climate program, which includes cap and trade, called for a reduction in greenhouse gas emissions to 1990 levels by 2020; however, they are expected to be far below 1990 levels in three years time. As emissions have decreased in the state, economic output has increased, many new jobs have been created and business is booming. A lot of the new jobs are a result of investment in clean energy technology.

Some sustainability experts say we should think of cap and trade like a rebate program to reduce greenhouse gas and our overall energy consumption. Who doesn’t like payback?

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