Planet Money
Can cap and trade work in the US?
Oct 9, 2024
Delve into Washington's ambitious cap-and-trade system aimed at reducing carbon emissions. Hear personal stories of individuals navigating this new climate policy landscape. Explore the economic and political implications, including revenue generation and public reactions to rising gas prices. Discover the controversies surrounding cap and trade and the skepticism it faces from influential hedge fund managers. The stakes are high; this experiment could reshape climate policy across the U.S. or serve as a cautionary tale if it falters.
24:05
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Quick takeaways
- Washington's cap-and-trade system aims to drastically reduce carbon emissions through market-driven mechanisms, generating significant revenue while facing political challenges.
- The success or failure of Washington's initiative could influence other states to adopt similar climate policies, making the political landscape crucial for its future.
Deep dives
The Economic Perspective on Climate Change
Economists view climate change as a classic economic problem characterized by market failure, where polluters do not fully bear the costs of their actions. This disconnect leads to the suggestion that raising the price of carbon emissions, primarily through mechanisms like carbon taxes or cap-and-trade systems, could incentivize better behavioral choices. A carbon tax is often advocated by economists, although it faces political challenges due to the unpopularity of new taxes. In contrast, cap-and-trade systems appeal to policymakers since they avoid explicitly labeling costs as taxes, thus providing an alternative to regulate emissions while allowing market dynamics to dictate pricing.
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