The Benefits of Cap and Trade

Cap and Trade is a policy designed to reduce pollution by limiting the amount of emissions. The government produces permits that allow parties to emit a certain amount of pollution, and there is an overall cap that strictly limits the total amount of pollution that an industry or economy can create. These permits are able to be traded or auctioned as supply and demand sets the price. This policy is a good idea, in my opinion, because it forces corporations to consider environmental effects in risk of facing penalties or heavy fines which directly affect their profitability, and according to our readings about CSR, corporations care a lot about their profitability. It is quite disappointing to realize that parties only care about the environment or social welfare if money is involved. One flaw to this policy is that it is quite difficult to measure an amount of pollution, so to make this policy work, there must be a universal measurement tool for pollution. Keywords: cap, trade, emissions