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When Cap and Trade Is Appropriate

Cap and Trade

In EPA's experience, cap and trade programs have proven highly successful in the context for which they are best suited. While achieving significant reductions on a regional scale, cap and trade programs have delivered substantial air quality improvements. However, they might not be the solution to every problem. For example, eliminating localized concentrations of pollution, while often a side benefit, is not their primary purpose.

The cap and trade approach is best used where:

Under the right circumstances, cap and trade programs have proven extremely effective, providing certainty in allocations, rules, and penalties; substantial emission reductions; cost-effective, flexible compliance choices for regulated sources; complete accountability, unprecedented data quality, and public access to program data and decisions; and minimized administrative costs for industry and government. EPA's cap and trade programs have the force of federal and state standards behind them, including national health-based air quality standards. This ensures that local public health needs are met in conjunction with achievement of regional or national emission reductions.

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