The debate in the United States on global climate change is shifting from whether to do something about the problem to what to do. The conventional wisdom focuses on “cap and trade,” also known as tradable emissions permits. The Kyoto protocol, for instance, has instituted a cap-and-trade system for greenhouse gases (GHGs).

But this conventional focus on cap and trade is inhibiting progress on combating global warming. It is extremely difficult to figure out the economic and environmental effects of an economy-wide cap-and-trade system for GHGs. To avoid negative economic impact, most such cap-and-trade proposals are extremely modest and thus would likely accomplish very little. Also, cap and trade would not work well on a global basis.

A more viable strategy relies on performance standards for new sources of GHG emissions. These standards would strictly regulate the pollutants from direct sources of emissions such as power plants and autos. They would also mandate greater efficiency for new capital such as appliances and buildings that rely on fossil fuel combustion for the generation of electricity, heating, and cooling.

The United States should take the first steps by:

• Setting a performance standard on all new coal-fired power plants permitted after the date the legislation is signed into law. This standard would require at least 85% removal of CO2.
• Setting performance standards for average annual new car fleet efficiency that become more stringent over time.
• Setting efficiency standards for new household appliances, new buildings, and industrial processes and updating them at least once every three years.

For the full article, go to A New Standard for Preventing Global Warming.