Cap-and-trade and offsets: from idea to practice
Proper pricing pays. That, in essence, is the main message of a century of experience with economic systems, including their environmental consequences. The previous chapter summarised the reasons, including why CO 2 seems an almost ideal case for applying the principle. CO 2 pricing can create an efﬁ cient and consistent incentive, across a huge range of activities, to cut emissions. In market-based economies, it seems an essential element of policy. Yet Chapter 6 also observed the struggles to implement the principle, particularly over carbon taxation. In most cases, cap-and-trade seems to have emerged as the least intractable way of getting CO 2 emitters to pay their dues. As so often, however, there is much devil in the detail. This chapter charts the many lessons learned in trying to translate the idea into reality.