Cap and Trade is Not Enough

A market-based mechanism (e.g. cap and trade or a carbon tax) is likely to be a key part of America's strategy to reduce carbon dioxide (CO2) emissions. We need to do this soon so that a framework for emissions reductions is established. However, for at least the next decade, a market-based approach alone will not induce the investments in long-lived technology needed to put the nation on a track to achieve a 50 to 80% reduction in emissions of carbon dioxide by mid-century. The range of prices for CO2 being discussed will be too low to make this happen.