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Cap and Trade Programs

Lee Layton, P.E.

Course Outline

The course begins with a discussion of when cap and trade might be the right tool to help control emissions.  From there we look at how to develop a cap and trade program and then how to implement and operate the program.  Finally, assessment and communications strategies are discussed.

This course includes a multiple-choice quiz at the end, which is designed to enhance the understanding of the course materials.

Learning Objective

After taking this course you should:

Intended Audience

This course is intended for anyone who wants to understand how pollution control programs work.

Benefit to Attendees

How the U.S. decides to implement additional emission controls on the energy sector will have a profound impact on the future economic vitality of this country.  This course will help you to understand the advantages and risks of implementing a cap and trade program.

Course Introduction

To ensure a cleaner, healthier environment, governments are increasingly using market-based pollution control approaches, such as emission trading, to reduce harmful emissions. The theory of emission trading and the potential benefits of market-based incentives relative to more traditional environmental policy approaches are well established in economic and policy literature. Until recently, however, practical applications of emission trading programs have been relatively limited. In 1990, the United States enacted legislation to implement a comprehensive national sulfur dioxide (SO2) program using a form of emissions trading called “cap and trade.” The U.S. SO2 cap and trade program has proven to be highly effective from both an environmental and an economic standpoint. The success of this program and others that followed has spurred interest from policymakers, regulating authorities, and business and environmental organizations. Today, emission trading mechanisms are increasingly considered and used worldwide for the cost-effective management of national, regional, and global environmental problems, including acid rain, ground-level ozone, and climate change.

Cap and trade is a market-based policy tool for environmental protection. A cap and trade program establishes an aggregate emission cap that specifies the maximum quantity of emissions authorized from sources included in the program.

Cap and trade programs offer a number of advantages over more traditional approaches to environmental regulation. First and foremost, cap and trade programs can provide a greater level of environmental certainty than other environmental policy options. The cap, which is set by policymakers, the regulating authority, or another governing body, represents a maximum amount of allowable emissions that sources can emit. Penalties that exceed the costs of compliance and consistent, effective enforcement deter sources from emitting beyond the cap level. In contrast, traditional policy approaches such as command-and-control regulation generally do not establish absolute limits on allowable emissions but rather rely on emission rates that can allow emissions to rise as utilization rises.

Course Content

This course content is in the following PDF document:

Cap and Trade Programs

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Course Summary

How the U.S. decides to implement additional emission controls on the energy sector will have a profound impact on the future economic vitality of this country.  This course has given you a detailed overview of how these programs work and should provide an understanding of the advantages and risks of implementing a cap and trade program.


Once you finish studying the above course content, you need to take a quiz to obtain the PDH credits.

DISCLAIMER: The materials contained in the online course are not intended as a representation or warranty on the part of PDH Center or any other person/organization named herein. The materials are for general information only. They are not a substitute for competent professional advice. Application of this information to a specific project should be reviewed by a registered architect and/or professional engineer/surveyor. Anyone making use of the information set forth herein does so at their own risk and assumes any and all resulting liability arising therefrom.