A Carbon Cap: The Best Policy Option

Compared to a carbon tax, a cap is cheaper and more effective

Posted: 30-Jan-2009; Updated: 14-May-2009

A cap is the best path to climate security: it guarantees reductions in global warming pollution at the lowest possible cost. A tax on carbon emissions might make pollution cost more, but can't guarantee that emissions will go down as much as scientists tell us is necessary. A carbon cap will spur innovation and investment in new technologies.

A cap is the only way to guarantee global warming pollution reductions

• A cap puts a hard limit on global warming pollution, and that's the key to a stable climate. We know how much pollution we have to cut, and a cap is designed to meet that requirement.
• A well-designed cap also helps stop forest destruction, which is responsible for about one fifth of global warming.  A tax can’t do that.
• A tax doesn't actually limit pollution. If polluters are willing to pay the price, they can continue to pollute, and even increase their pollution. Setting a tax at the right level is a guessing game: we do not know how high it has to be to discourage enough pollution to stabilize the climate.

A carbon cap leads to economic growth

A cap helps create new green jobs by stimulating investment and markets for new technology made in the US.

• Cap and trade creates a market for private sector innovation by rewarding companies who can find ways to cut carbon. Both cap and trade and a carbon tax would raise government revenue – but a tax provides limited incentive for new investment. The incentives under a cap will unleash the huge potential of private capital investment.
• The market will create new green jobs because there will be massive new demand for clean energy products.

A carbon cap is politically viable

Because it lowers costs and helps business cut pollution more effectively, a carbon cap is the more politically feasible approach to fixing climate change. The challenge of stabilizing our climate is too important to support solutions that can't become law.

• A carbon cap already enjoys broad support from a wide range of political, business and other leaders.
• Pushing a new tax won't get far in today's political and economic atmosphere – and the only viable tax will be a tax that's too low to fight climate change.
• A cap is firm but flexible. Congress determines the allowable quantity of emissions based on the best science, and businesses determine how to meet the cap and at what cost. In this way, science can determine the limit on emissions, while giving business options for cost-savings, innovation and efficiencies.
• A tax requires the government to guess. With a carbon tax, the price of pollution is set by the government, and there's no guarantee the price will be what's needed to stabilize the climate.
• See our online map that identifies more than 1,200 companies in key manufacturing states poised to grow their business and create new jobs under a carbon cap.

A carbon cap is the best way to include developing nations

• The ability to participate in a U.S. carbon market is a huge incentive for countries like China and India to cap their own emissions.
• We can't tell these countries to tax their own economies, but we can invite them to participate in a new, fast-growing carbon marketplace here in the U.S.