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PalletCentral • November-December 2022 43 The overall goal of cap and trade is to reduce pollution by setting a limit on emissions and creating a market for buying and selling emissions allowances. was never fully implemented, and was eventually replaced by other climate change policies. Despite its challenges, cap and trade remains one of the most popular mechanisms for reducing greenhouse gas emissions. California's current cap and trade system has been in place for a number of years and is see as a model for future use at a broader level. How Does Cap and Trade Work? In order to understand how cap and trade works, it is important to first understand what it is. Cap and trade is a system that was created in order to help reduce greenhouse gas emissions. e way it works is by setting a limit, or cap, on the amount of emissions that a company or country can produce. If they exceed this limit, they must purchase credits from others who have not reached their limit. is provides an incentive for companies to reduce their emissions, as they can then sell their credits to others. e cap-and-trade system has been used in the United States since 2009, when the Environmental Protection Agency (EPA) launched the program in an effort to combat climate change. e program has been successful in reducing emissions, but there are still some critics who argue that it does not do enough to address the problem. The Pros and Cons of Cap and Trade e cap-and-trade system is a market-based approach to controlling pollution by providing economic incentives for achieving reductions in the emissions of pollutants. e pros of this system are that it provides a financial incentive for companies to reduce their emissions, and it allows companies to trade emissions allowances with each other. is flexibility means that companies can choose the most cost-effective way to meet their emission reduction targets. e cons of cap and trade are that some argue it may not lead to the level of emission reductions needed to combat climate change, and it could create windfall profits for companies that have already made investments in clean technology. The Future of Cap and Trade As the world continues to face the reality of climate change, many countries, industries, and companies are searching for ways to reduce their carbon footprint and implement sustainability into their processes. e pallet industry continues to explore new areas of their business models to determine where recycling and reuse can fit into a system that rewards lowering greenhouse gas emissions and the ability to sequester carbon. While we have witnessed the voluntary carbon market slowly rise and gather momentum, it remains relatively misunderstood and somewhat of a "black box" in terms of value and efficacy. In the near future, if the pallet industry is able to link custody of certain parts of the sequestration process to recycling that generates a monetary return, industries and companies will beat a path to the doors faster than you can say, "Wood Is Good." Some Great Resources to Explore • Calmatters – e Basics of Cap and Trade • Environmental Defense Fund – How Cap and Trade Works • Cap and Trade – Pros and Cons

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