Regardless of how anyone feels about the validity of manmade climate change, we can all agree that nobody wants to live in an over-polluted environment. While there are simple, everyday steps that we can all take, such as picking up litter and recycling, larger problems require larger solutions. On a personal level, this may entail steps like buying a more efficient hybrid vehicle, purchasing efficient appliances; however, to make a sector, country-specific, or international difference, systems like today’s word, emission trading, often come into play.
Also known by the phrase “cap and trade”, emission trading involves the reduction of atmospheric pollution through the governmental issuing of permits in order to be able to emit a certain amount of pollutants in a certain period of time.
Breaking the phrase itself down, it involves the gerund (noun of action) of the word trade, which comes from the middle Dutch or Middle Low German word trade, meaning ‘track or course (as with a merchant ship)’, and was first used in the context of the buying and selling of goods, commodities, and services in a work by E. Bonner, Bishop of London, who wrote in 1556 that: “An honest godly instruction, and information for the trading, and bringing up of Children.” The second half of the phrase – aka what exactly is being traded – is the noun emission, which finds its root in the Latin phrase ex mittere, meaning ‘to send out’, and was first used in the context of something imponderable, such as light, heat, gases, or even, initially, the soul, by the philosopher and scientist Francis Bacon, writing around 1626 in his work, Sylva Aylvarum; or, A Naturall Historie, that: “Tickling also causes Laughter. The Cause may be, the Emission of the Spirits.”
For our specific, modern understanding of the term, emission specifically referring to a pollutant or greenhouse gas released into the atmosphere (typically due to human activity) can be traced back to a 1966 issue of the Journal of the Air Pollution Control Association, which included the title: “Emissions from carbureted and timed fuel injected engines.” Taking this a step further, the idea of emissions trading was first used on 13 December, 1978 in the industry magazine Chemical Week, stating that: “Among restrictions of the program are the requirement that only the same pollutant can be exchanged, and in certain categories, a ban on emissions trading.”
The term: Emission Trading
Though the first mention of the term may have occurred in late 1978, the efficiency of the idea was well known by then: a series of computer simulation conducted by Ellison Burton and William Sanjour for the U.S. National Air Pollution Control Administration (predecessor of the Environmental Protection Agency) from 1967 to 1970 had confirmed the usefulness of the concept. Essentially, rather than just causing economic uncertainty by forcing arbitrary cuts on industries and economies due to inflexible environmental regulations, the system attempts to use free market concepts to efficiently allocate resources while also seeking to encourage the reduction of pollutants as well as minimise the economic impact of trying to do more with less. In practice, the efficacy of such a system can be seen in the acid rain trading system (for nitrogen oxides and sulfur dioxide) that grew from an Environmental Defense Fund suggestion that was included in the U.S. Clean Air Act of 1990, which saw acid rain emissions drop by 3 million tons in the first year of the trading mechanism’s use.
Conceptually, at least, the logic behind the trading pollution credits offers a number of benefits. First and foremost, it gives information and transparency to individuals as well as the government- it’s clear what progress is being made to cut emissions, who is making that progress, and, more importantly, who isn’t. Secondly, it creates a new economic resource for business and industry, which, if not using credits, can sell them for a profit to other businesses/industries. Third, the overall hope is that, instead of having to worry about having enough credits, this will spur innovation and implementation of cleaner, more efficient forms of energy or means of production.
Of course, no system is perfect: there are no benefits without drawbacks, and, in the case of emission trading, the devil is in the details. Naturally, innovation and implementation (much like newer forms of energy) isn’t cheap, and one of the unfortunate potential results can come in the form of higher prices for goods and services. Additionally, especially for relatively entrenched industries, even when considering the cost of credits as well as any penalties for exceeding a cap, the added costs can be less expensive than the cost of fully converting to a new source of energy. Finally, as with any system, there is the cost of monitoring (not to mention fraud): simply put, it would take an army of analysts, researchers, and monitors to assure and verify that everybody is playing by the same set of rules at all times.