According to a new policy brief, released only recently by climate experts at the Carnegie Mellon university, cap-and-trade systems alone will not be sufficient in ensuring that the United States lower their carbon dioxide (CO2) emission levels by 50 to 80 percent until 2050. This goal has been expressed by the White House, and politicians are currently looking at ways of ensuring that the objective remains reachable. However, simply creating a market for carbon permits may not suffice.

In this type of carbon schemes, the government issues a number of carbon permits, which are in limited numbers. Each company working with fossil fuels, or whose activities pollute the environment, is then alloted with a number of these permits.

If one company gets through a whole fiscal year without “cashing in” all the CO2 rights in the permits, it can sell them to another one that has failed to remain within the standards of its own permits. This allows the former to get some money out of the fact that it has polluted less, and also lets the other business continue to operate until it, too, will be able to offset more of its CO2 emissions.

Critics to this type of system say that its efficiency is questionable, because it does not address the very purpose it has been created for, namely to combat pollution. In other words, this type of systems does not force companies to drop emission rates, but simply encourages them, under the threat of some fines, if they are caught exceeding their carbon permit limits.

“While a cap and trade or carbon tax policy is an important step in reducing emissions, the range of prices for carbon dioxide permits being discussed will be too low to induce the large-scale investments we need,” CMU Engineering and Public Policy Department research fellow Constantine Samaras, who is also one of the six co-authors of the new brief, explained.

“The future price of carbon dioxide permits must rise to at least $50 per ton or more before electric power companies will find it cost-effective to build coal-fired power plants that will capture and sequester their emissions and other types of low-carbon power plants. Potentially higher prices might be required to foster the big changes we need in the way we make and use appliances and automobiles. We should be augmenting cap and trade proposals with strong standards to induce low-carbon investments in the near-term,” he said.

“To achieve the large emissions reductions required to ensure that atmospheric concentrations of carbon dioxide do not reach levels considered by many scientists to be disastrous, additional measures beyond cap and trade will be necessary. We need to build low-carbon power plants, give incentive to utilities to invest in efficiency, and significantly reduce the energy use of our appliances, buildings and vehicles,” the co-authors concluded.