Understanding Cap-and-Trade
There are a number of ways to reduce carbon dioxide (CO2) emissions, if that is a worthwhile goal. Among the two most often discussed are a direct tax on carbon and "cap-and-trade." While economists generally agree that the most direct, efficient and transparent way to reduce emissions is to tax carbon production directly, the bills before Congress and ideas being promoted by the Obama administration pursue emission reductions through a cap-and-trade mechanism.