A New Cap-and-Trade Plan To Limit Emissions… But Is This The Best Policy?

Connecticut, Delaware, Maryland, Massachusetts, New Jersey, Pennsylvania, Rhode Island, Vermont and Virginia have each committed to cut transportation emission in their state with a new cap-and-trade system. The nine states have agreed to cooperate on regional policies that would cap carbon emissions from fossil fuels. Revenue from the cap-and-trade would be reinvested by each state in carbon reducing projects, such as public transport, electric vehicles (EV) and EV charging infrastructure.

The nine eastern states are expected to model their new transportation emissions-reduction program after California’s program. California’s cap-and-trade program allows carbon emitters to buy and sell allowances for emissions that result from vehicles that burn fossil fuels. Costs would be passed down to consumers with higher prices at the pump. California estimates that the average driver will spend approximately $6.00 a month more for gasoline.

Unlike California, many homes in the eastern U.S. still use fuel oil for heating. One of the challenges of the program will to ensure that low-income families are not negatively impacted by the new cap-and-trade policies. Policies similar to California’s program have been blamed to significant increases in the basic cost of living. A proposed cap-trade-policy in France recently resulted in massive riots across the country, because of the perceived impact on low-income families.

Personally, I applaud the collaboration of the nine, eastern U.S. states to reduce greenhouse gas emissions in the transportation sector. However, a review of global carbon tax and cap-and-trade programs show that low-income families inevitably suffer the most from these well intended policies. I would argue that tax incentives at the state and federal level are the most effective method to reduce greenhouse gas emissions. The tax credits would provide incentives for business to move from fossil fuel power plants to renewable energy without increasing energy costs on low-income families. Tax credits for consumers that buy EVs and businesses that install EV charging infrastructure would accelerate the move from internal combustion vehicles to EVs.

In summary, dramatically reducing greenhouse gas emissions is a challenge that America and the rest of the world are facing together. In my opinion, we must look at emission policies around the world to determine what has and has not worked. I firmly believe that America has the intellectual and financial capital to make the move to renewable energy happen in an expedient and cost effective manner.

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