Press Release: New Paper Makes Case for Cap and Trade

Press Release
July 26, 2010
Contact: Tom Steinfeldt, 703-516-4146

Despite Senate Delay, Cap and Trade Proves Most Effective Approach to GHG Reductions
Pew Center on Global Climate Change Paper Makes Case for Market-Based Climate Policy

Washington, D.C. – While the U.S. Senate has decided to delay consideration of comprehensive clean energy and climate change legislation, a new Pew Center on Global Climate Change paper makes the case that cap and trade continues to be the most effective policy option for reducing global warming pollution and spurring innovation in clean energy technologies. When policymakers turn their attention back to this issue—as they must—they should make cap and trade a foundational element of the policy response to climate change. 

“Climate change isn’t going away,” said Pew Center on Global Climate Change President Eileen Claussen. “While the Senate may have avoided taking up meaningful legislation this year, eventually we are going to need a serious climate and energy policy in this country or suffer the consequences of a warming planet, energy insecurity, subdued innovation, and diminished international competitiveness. Done right, cap and trade should be a recipe for attracting the bipartisan support necessary to pass a strong climate bill.”

The Pew Center paper examines fundamental questions about market-based approaches to reduce greenhouse gas (GHG) emissions and reasons why cap and trade is the most promising option to address the risks of climate change. In Meaningful and Cost Effective Climate Policy: The Case for Cap and Trade, authors Janet Peace and Robert N. Stavins rebut a number of common criticisms against using market-based mechanisms to reduce U.S. GHG emissions to show that cap and trade remains the most cost-effective climate policy solution.

A well-designed cap-and-trade system puts a price on carbon which harnesses market forces to reduce emissions at low cost, the paper explains. Moreover, cap and trade policy can be revenue neutral and protect consumers, while providing the certainty businesses need to unleash massive investments in clean energy technologies.

The paper argues that past concerns about how markets operate can be effectively addressed and result in a policy that is environmentally and economically superior to more traditional forms of regulation. For example: strong oversight can prevent GHG markets from being manipulated; allowance value can be distributed to protect consumers and avoid windfall profits for corporations; and overall costs to the economy are kept low due to the flexibility inherent in cap-and-trade programs.

Peace is Vice President of Markets and Business Strategy at the Pew Center on Global Climate Change. Stavins is the Albert Pratt Professor of Business and Government at Harvard University’s John F. Kennedy School of Government.

Meaningful and Cost Effective Climate Policy: The Case for Cap and Trade can be accessed online at

For more information about global climate change and the activities of the Pew Center, visit

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The Pew Center on Global Climate Change was established in May 1998 as a non-profit, non-partisan, and independent organization dedicated to providing credible information, straight answers, and innovative solutions in the effort to address global climate change. The Pew Center is led by Eileen Claussen, the former U.S. Assistant Secretary of State for Oceans and International Environmental and Scientific Affairs.