Edison bailed out CA Cap & Trade auction

San_Onofre_Nuclear PlantJan. 9, 2013

By Wayne Lusvardi

The facts slowing coming out about the state’s first Cap and Trade auction seriously question whether the system is already being gamed by government, together with electric utilities.

Edison International made an announcement on Dec. 20, 2012: At California’s first Cap and Trade auction held back on Nov. 14, 2012, it offered to buy 21 times more pollution permits than allowed.

Edison’s overbidding error ended up amounting to 72 percent of all the bid offers and bailed out the Cap and Trade auction from failure. About a month later, Edison’s unregulated power-generating subsidiary company, Mission Energy, declared bankruptcy on Dec. 17, 2012.

CARB’s “Credibility called into question”

Bloomberg.com reported on Dec. 20, 2012 that Edison International “unintentionally” bid for twice as many pollution allowance permits as were offered for sale.  Edison said its error was due to submitting a bid in the wrong format.  For anyone who has ever worked in a large bureaucratic utility, Edison’s statement seems unbelievable. The number of hands it would typically take to review and sign off on any bid would have made highly suspicious any so-called bidding error resulting in 21 times the permits offered. Moreover, CARB provided training on auction procedures and held a test sale back on Aug. 30.

Bloomberg New Energy Finance analyst William Nelson said of the California Air Resources Board, “This revelation calls the agency’s credibility into question.  For So Cal Ed, it appears now to have 1.61 million allowances it never intended to buy on its hands for which it spent approximately $16 million. The irony is that Edison was ultimately rewarded for its mistake, procuring credits at a price that is ‘in the money,’ today.”

Edison bid for approximately 16,632,000 pollution permits out of the total of 23.1 million permits allowed. After CARB disqualified Edison’s excessive bid, Edison ended up buying 4.05 million pollution permits. This was still 1.61 million more permits than its allowance of permits

CARB Chair Mary Nichols declared the auction “went without a hitch” and was “vibrant and successful.” However, Nichols failed to mention at that time that, without Edison’s “error,” the auction would have been a failure. She also waited until Christmas week when the public’s attention was preoccupied to release information about Edison’s bidding error.

Nichols’ claimed CARB created a “vibrant market” for pollution permits. But the auction conducted last November was not a market auction. This was because there was no competitive bidding, even with Edison’s excess demand for permits.  Instead, bid prices for nearly all 23.1 million permits went for the minimum bid of $10 per ton of pollution, or a few cents more in some cases.  Bidders merely paid a disguised tax and went back to business without reducing any emissions.

Edison arm declares bankruptcy

Coincidentally, on Dec. 17, 2012, Edison’s subsidiary, Mission Energy, filed for bankruptcy. Mission Energy listed $5.13 billion in assets and $5.09 billion in liabilities.  Since both companies are separate legal entities, Edison International apparently did not dump the cost of its trading error onto insolvent Mission Energy.  However, the law firm of Pillsbury, Winthrop, Shaw and Pittman, LLP in New York, representing creditor Chevron, did not respond to an inquiry whether the bankruptcy judge could “puncture the corporate veil” and void Edison International’s CARB auction bid.

Mission Energy was created during the California Energy Crisis of 2000-01 in a “ring fencing” strategy to absorb financial losses of its parent company, Edison International.  Ring fencing is a way to fence off certain assets or liabilities by creating a new subsidiary.  By ring fencing a parent company can protect itself against bankruptcy.

Bid rigging and plausible collusion

This seriously calls into question whether either collusion or gaming of the bid system took place. Back on May 18, 2012, this writer warned that CARB’s auction system created perverse incentives for government to game or collude with electric utilities to generate more tax revenues for the state.  Edison’s apparent auction bidding strategy was to bid for excessive permits to prevent the auction from being declared a failure and buy up all the permit allowances.  Edison’s initial bid for 72 percent of the permits was then negotiated downward after the auction to almost exactly the same number of permits allowed.

The effect that this apparent overbidding scheme may have on the California Chamber of Commerce’s lawsuit charging CARB with profiting from Cap and Trade auctions remains to be seen.


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  1. Ted Steele, Navigator
    Ted Steele, Navigator 9 January, 2013, 13:37

    Ahh yes– Cap and trade– the darling of the Reagan White House.

    Reply this comment
  2. Richard deSousa
    Richard deSousa 9 January, 2013, 14:48

    The European Cap and Trade market collapsed due to fraud. It’s no surprise CARB is suppressing any news of irregularities in the trading of carbon in California. I expect CARB’s Cap and Trade of carbon will also collapse in the near future from lack of participation from potential participants.

    Reply this comment
  3. jimmydeeoc
    jimmydeeoc 9 January, 2013, 17:07

    Let us hope, Richard……

    Which will leave Mary Nichols wandering the back roads, looking for people to pester.

    Reply this comment
  4. us citizen
    us citizen 9 January, 2013, 17:46

    love it……hope it goes up in flames

    Reply this comment
  5. Hondo
    Hondo 9 January, 2013, 21:41

    This thing is so far under the radar screen that I imagine 95% or more of Kalifornian’s have no idea this thing is going on. That makes it so much easier to steal and cheat.
    I am a collage educated adult who took econ classes and I can’t for a minute, figure out what, and how, they are buying and selling. I harken back to 2010, just after the housing crash. Some banker had come up with some derivatives for a financial product that not even Alan Greenspan could figure out, when he was shown them.
    Edison obviously tried to buy up the market of whatever they were selling so they could have a monopoly. Free market capitalism is so messy and unreliable when it comes to making profits. Especially when you can control all the product. Kinda like diamonds. There are lots of diamonds, but a couple companies have hedged and own the entire market to guarantee no competition and a steady income stream.
    I’m not sure my analogies relate because, I admit, I have no idea whats going on.

    Reply this comment
  6. Rex the Wonder Dog!
    Rex the Wonder Dog! 9 January, 2013, 22:29

    Ahh yes– Cap and trade– the darling of the Reagan White House.
    Well at least now you’re FINALLY admitting Ronnie Raygun was NOT the father of cap n scam.

    Reply this comment
  7. jimmydeeoc
    jimmydeeoc 9 January, 2013, 23:30

    very true Hondo.

    I admit I haven’t sat down and read a thorough outline of the entire Cap and Trade structure. I could probably understand the Cliffs Notes version of it if I tried…it’s just that my eyes glaze over. I’ve figured out the Net Present Value of esoterica such as Air Rights. From my cursory view, Cap n’ Trade dwarfs such things like air rights in their complexity.

    And that from someone who (like all of you on here) is at least aware the program EXISTS. Like you say – 95% of folks are no more aware of Cap n Trade than they are the inner workings of the Pyongyang government.

    Now that I think of it…….”Cap and Trade for Dummies” isn’t such a bad idea.

    Reply this comment
  8. The Modified Ted Steele Methodologies (tm)
    The Modified Ted Steele Methodologies (tm) 10 January, 2013, 06:59

    Sorry little buddy– Even the ultra right Smithsonian agrees that Raguns is the Father of Cap and Trade…….You still living on that river? ahhhh De Nial….. LOL

    0 for 14 ™~


    Reply this comment
  9. Rex the Wonder Dog!
    Rex the Wonder Dog! 10 January, 2013, 08:09

    The exact same “copy n paste”…never changes from the chimp.

    Reply this comment
  10. Ted Steele, Navigator
    Ted Steele, Navigator 10 January, 2013, 09:00

    of course the Poodle is smarter than the Smithsonian and the many commentaters who agree that Rayguns was the father of Cap and Trade….lol

    Reply this comment
  11. Rex the Wonder Dog!
    Rex the Wonder Dog! 10 January, 2013, 10:24

    Where is your “copy n paste”????

    Reply this comment
  12. The Modified Ted Steele Methodologies (tm)
    The Modified Ted Steele Methodologies (tm) 10 January, 2013, 20:56

    Well—since you have requested a cut and paste— ok little fella —here’s a nice one Poodle–maybe someone can read it to ya!

    By Daniel J. Weiss | October 22, 2010

    Opposition to “cap-and-trade” legislation to reduce global warming pollution is a common refrain among many Republican and a few Democratic officials this fall. The program is derided as a “cap and tax” that would drain voters’ wallets while bankrupting the nation. But ironically enough, the three most recent Republican presidents promoted cap and trade, including Ronald Reagan. They employed such a system to phase out lead in gasoline, cut chlorofluorocarbons and other ozone-depleting chemicals, and reduce sulfur pollution from power plants responsible for acid rain—all without undue cost. Officials who are criticizing it now are doing so for political purposes, and they could likely make it harder to employ cost-effective, market-based policies in the future to significantly lower pollution at an affordable cost.

    Reply this comment
  13. Rex the Wonder Dog!
    Rex the Wonder Dog! 11 January, 2013, 07:05

    daniel weiss… as i told you last time with this cut n paste, he is a left wing nut

    Reply this comment
  14. Rex the Wonder Dog!
    Rex the Wonder Dog! 11 January, 2013, 07:06

    Daniel J. Weiss

    Senior Fellow
    Expertise: Energy and environment

    Daniel J. Weiss is a Senior Fellow and the Director of Climate Strategy at American Progress, where he leads the Center’s clean energy and climate advocacy campaign. Before coming to American Progress, he spent 25 years working with environmental advocacy organizations and political campaigns.

    Reply this comment
  15. Ted Steele, Navigator
    Ted Steele, Navigator 11 January, 2013, 09:34

    He is a left wing nut?

    What are you little fella?

    Other than of course –0 for 14 ™!

    Reply this comment
  16. Wayne Lusvardi
    Wayne Lusvardi 11 January, 2013, 21:01





    The efficiency of what later was to be called the “cap-and-trade” approach to air pollution abatement was first demonstrated in a series of micro-economic computer simulation studies between 1967 and 1970 for the National Air Pollution Control Administration (predecessor to the United States Environmental Protection Agency’s Office of Air and Radiation) by Ellison Burton and William Sanjour. These studies used mathematical models of several cities and their emission sources in order to compare the cost and effectiveness of various control strategies.[17][18][19][20][21] Each abatement strategy was compared with the “least cost solution” produced by a computer optimization program to identify the least costly combination of source reductions in order to achieve a given abatement goal.[22] In each case it was found that the least cost solution was dramatically less costly than the same amount of pollution reduction produced by any conventional abatement strategy.[23] Burton and later Sanjour along with Edward H. Pechan continued improving [24] and advancing[25] these computer models at the newly created U.S. Environmental Protection Agency. The agency introduced the concept of computer modeling with least cost abatement strategies (i.e. emissions trading) in its 1972 annual report to Congress on the cost of clean air.[26] This led to the concept of “cap and trade” as a means of achieving the “least cost solution” for a given level of abatement.

    The development of emissions trading over the course of its history can be divided into four phases:[27]

    1. Gestation: Theoretical articulation of the instrument (by Coase,[28] Crocker,[29] Dales,[30] Montgomery[31] etc.) and, independent of the former, tinkering with “flexible regulation” at the US Environmental Protection Agency.

    2. Proof of Principle: First developments towards trading of emission certificates based on the “offset-mechanism” taken up in Clean Air Act in 1977.

    3. Prototype: Launching of a first “cap-and-trade” system as part of the US Acid Rain Program in Title IV of the 1990 Clean Air Act, officially announced as a paradigm shift in environmental policy, as prepared by “Project 88”, a network-building effort to bring together environmental and industrial interests in the US.

    4. Regime formation: branching out from the US clean air policy to global climate policy, and from there to the European Union, along with the expectation of an emerging global carbon market and the formation of the “carbon industry”.

    In the United States, the “acid rain”-related emission trading system was principally conceived by C. Boyden Gray, a G.H.W. Bush administration attorney. Gray worked with the Environmental Defense Fund (EDF), who worked with the EPA to write the bill that became law as part of the Clean Air Act of 1990. The new emissions cap on NOx and SO2 gases took effect in 1995, and according to Smithsonian magazine, those acid rain emissions dropped 3 million tons that year.[32

    Reply this comment
  17. The Modified Ted Steele Methodologies (tm)
    The Modified Ted Steele Methodologies (tm) 11 January, 2013, 21:07


    Wiki notwithstanding…

    Many Republican officials greatly admire the father of cap and trade: President Ronald Reagan. Yet opposition to “cap-and-trade” legislation to reduce global warming pollution is a common refrain among many Republican and a few Democratic officials this fall. The program is derided as a “cap and tax” that would drain voters’ wallets while bankrupting the nation. After the demise of comprehensive global warming legislation in the Senate, Minority Leader Mitch McConnell (R-KY) gloated that “cap-and-trade, which is also known as the national energy tax, is dead in the United States Senate.”
    Ironically enough, the three most recent Republican presidents promoted cap and trade, including Ronald Reagan. They employed such a system to phase out lead in gasoline, cut chlorofluorocarbons and other ozone-depleting chemicals, and reduce sulfur pollution from power plants responsible for acid rain — all without undue cost.
    Former Gov. Sarah Palin (R-AK) praised Reagan last year:
    When you realize the magnitude of President Reagan’s achievements, there is absolutely no reason why anyone would ignore his ‘demonstrably good’ example.
    Nonetheless, she and many of today’s public officials oppose a global warming plan that would employ the innovative cap-and-trade system first created by President Reagan, repudiating his legacy for cheap political gain and to curry favor with polluting industries.
    The Reagan White House conceived the first cap-and-trade program to reduce pollution, used in the 1980s to phase out lead in gasoline at a lower cost. It was developed as a more flexible, market-based system to reduce environmental pollution compared to the so-called “command and control” model employed by environmental laws in the 1970s. The old system required each polluting facility to make a fixed reduction in air or water contamination, which ignored that some facilities could cut pollution more cheaply than others. An EPA analysis shows:
    … estimated savings from the lead trading program of approximately 20 percent over alternative programs that did not provide for lead banking, a cost savings of about $250 million per year.
    President Reagan also signed the Montreal Protocol in 1987 to slash the production and use of chemicals that deplete the upper ozone layer essential to screen out cancer-causing ultraviolet rays. His administration established a cap-and-trade system to implement the chemical reductions the protocol required. A 2006 scientific assessment concluded that “the Montreal Protocol is working” to reduce chemicals and protect the ozone layer.
    President George H.W. Bush, Reagan’s successor, was the first president to propose the employment of a cap-and-trade system in an environmental law. The Clean Air Act of 1990 includes his proposed cap-and-trade system to reduce the sulfur pollution from power plants responsible for acid rain.
    The Clean Air Act passed the Senate by a vote of 89-10 and the House by 401-25. Many staunch conservatives voted for it including Sens. Kit Bond (R-Mo), Trent Lott (R-MS), Mitch McConnell (R-KY), and Strom Thurmond (R-SC). Conservative House supporters included Reps. Newt Gingrich (R-GA), Joe Barton (R-TX), Dennis Hastert (R-IL), Jim Inhofe (R-OK), and Fred Upton (R-MI).
    When President Bush signed the Clean Air Act into law he highlighted its innovative cap-and-trade mechanism:
    The acid rain allowance trading program will be the first large-scale regulatory use of market incentives and is already being seen as a model for regulatory reform efforts here and abroad.
    “To reject this legacy and embrace the failed 1970s policies of one-size-fits-all regulatory mandates would signify unilateral surrender of principled support for markets,” write economists Richard Schmalensee, who worked in the Reagan White House, and Robert Stavins. “If some conservatives oppose energy or climate policies because of disagreement about the threat of climate change or the costs of those policies, so be it. But in the process of debating risks and costs, there should be no tarnishing of market-based policy instruments. Such a scorched-earth approach will come back to haunt when future environmental policies will not be able to use the power of the marketplace to reduce business costs.”
    Schmalensee and Stavins’s warning should be heeded: This current crop of Republican and a few Democratic officials—in their zeal to curry favor with their special interest funders and Tea Party activists—could doom future efforts to follow the path paved by Presidents Reagan, Bush, and Bush to reduce pollution in the most cost-effective way possible.

    Reply this comment
  18. The Modified Ted Steele Methodologies (tm)
    The Modified Ted Steele Methodologies (tm) 11 January, 2013, 21:09

    Just like many repub hacks hate that Nixon invented the EPA—

    What Would Reagan Do
    About Climate Change?

    By David Jenkins
    The climate change skeptics who populate our radio and television airwaves, such as Rush Limbaugh and Glenn Beck, like to claim that their views match those of the late President Ronald Reagan. In doing so, they leave their audiences with the impression that Reagan would share their skepticism about climate change and oppose action to reduce greenhouse gas emissions — an impression that liberals are equally happy to perpetuate.

    Of course, their saying so does not make it true.

    In reality, the howlers on talk radio and Fox News are less interested in following Reagan’s lead than they are in remaking him in their own image. Reagan is not their compass, but rather a cloak they wrap themselves in for credibility.

    That is why you will never hear Limbaugh or Beck mention—much less praise—any of Reagan’s environmental accomplishments. His conservation record and his stewardship ethic do not project an image of Reagan that fits with their ideological agenda. So they ignore that aspect of Reagan’s conservatism—as do liberals, albeit for different reasons.

    If Reagan were alive and serving as president today, no one could know exactly what he would do about a problem that was only beginning to be recognized during his administration, but we can glean clues based on a careful examination of his record.

    Fortunately, we have an example from his presidency that is quite revealing in the context of the current climate change debate. Extremists on both the left and on the right might be surprised.

    The Real “Ozone Man”

    In 1984, researchers confirmed a hypothesis that chlorofluorocarbons (CFCs) used in aerosol sprays and refrigeration equipment were depleting the earth’s protective ozone layer.

    They concluded that unless ozone-depleting chemicals were phased out, life on earth would be exposed to ever-increasing levels of dangerous ultraviolet radiation emitted by the sun.

    These findings met with much the same kind of skepticism and resistance that have greeted scientific conclusions about climate change—and from many of the same sources. Limbaugh, for example, has been a longstanding cynic regarding both ozone depletion and climate change. He dismisses each problem as a “hoax” and has made ridiculing them a staple of his act.

    Reagan, when faced with mounting scientific concern about ozone depletion, listened to all sides, carefully weighed the facts, and ultimately sided with the climate scientists who were urging him to take prudent action to safeguard our atmosphere.

    Despite strong opposition from Interior Secretary Don Hodel and other skeptics within his administration, President Reagan chose to push through a strong international treaty to begin phasing out ozone-depleting chemicals.

    That 1987 treaty, the Montreal Protocol, is widely regarded as the most successful environmental treaty of all time.

    A few months before the final negotiating session the United States’ chief negotiator for the treaty, Richard Benedick, was concerned that Hodel and others would convince Reagan to back off the U.S. position, which demanded significant near-term CFC reductions.

    In a 2007 article entitled, Science, Diplomacy, and the Montreal Protocol, Benedick describes how he learned of the president’s decision:

    In June 1987, with the final negotiating session at Montreal less than three months away, I was at the Reichstag in Berlin to deliver an address on the fortieth anniversary of the Marshall Plan when a breathless U.S. Embassy attaché brought me an “Eyes Only” personal cable from the White House. President Reagan thus became the world’s first head of state to personally approve a national negotiating policy on ozone protection. Ignoring the advice of some of his closest political friends, the President completely endorsed, point-by-point, the strong position of the State Department and EPA.

    President Reagan decided to protect our atmosphere from a problem that, at the time, was not fully understood by scientists. He discounted the arguments of those who claimed that the problem was not real or that the economic cost would be too great.

    Today, because of his bold leadership, our ozone layer is healing.

    In the 2000 presidential race, former Vice President Al Gore was mocked by George W. Bush supporters with the label “Ozone Man.” Little did they know that the real “Ozone Man” is not Gore. It is Ronald Reagan.

    Cap and Tirade

    Turn on talk radio and you are likely to hear rant after rant about the evils of cap-and-trade legislation. Cap and trade is the common name for a market-based pollution control policy that sets caps on emissions and allows companies to buy and sell emission allowances.

    By establishing a limited market for these tradable allowances, a cap-and-trade program puts a price on harmful emissions and provides the companies a financial incentive to reduce emissions. Companies that find effective ways of cutting their emissions can sell their unused allowances to companies that are still exceeding the cap level.

    Under the traditional “command-and-control” approach to pollution reduction, the Environmental Protection Agency (EPA) would not only set pollution limits, it would also prescribe the technology companies were required to implement to achieve those reductions.

    It would probably come as quite a shock to Limbaugh and Beck, not to mention the tea party crowd and some GOP leaders, that the cap-and-trade method has a conservative lineage that can be traced back to the Reagan White House.

    During Reagan’s presidency, acid rain was a huge environmental problem. In addition to committing funds for research and emissions control projects, Reagan asked his Presidential Task Force on Regulatory Relief—chaired by then Vice President George H.W. Bush— to examine incentives for the deployment of emissions control technologies and identify new opportunities to address the problem.

    C. Boyden Gray, counsel for both Vice President Bush and the task force, became attracted to the idea of emissions trading as a market-friendly alternative to the “command-and-control” approach typically favored by bureaucrats.

    President Reagan seemed to allude to this in his 1987 State of the Union address, saying:

    We are also developing proposals that make use of market incentives to control air pollution caused by sulfur dioxide and nitrogen oxide emissions and the causes of acid rain.

    Reagan left the White House before the idea could be implemented, but Gray continued to work on the idea, and in 1990, the first Bush Administration successfully pushed through legislation establishing a cap-and-trade program to reduce acid rain. Cap and trade was a great success, reducing sulfur dioxide emissions faster and at a much lower cost than had been anticipated.

    Move Over Al

    When it comes to addressing climate change, Al Gore has become the 500-pound Donkey in the room. He is a climate hero to lefty environmentalists and the perfect butt of ridicule for climate skeptics. He even won a Nobel Peace prize for his work on climate change.

    While Gore’s education and fund-raising efforts around the issue are laudable, his efforts have not yet resulted directly in significant greenhouse gas reductions.

    With climate change, just as with ozone depletion, the real record of accomplishment belongs to Reagan.

    The impact of greenhouse gas emissions on our climate were just starting to be understood as Reagan’s presidency was winding down. Research into what was then called the “greenhouse effect” was in early stages, and scientists had not accumulated the body of evidence they have today that links greenhouse gas emissions to climate change.

    Still, as it turns out, it is Reagan’s successful negotiation of the Montreal Protocol treaty that stands as the biggest single accomplishment to date in reducing the greenhouse emissions responsible for global warming.

    The CFCs controlled by the treaty are very potent greenhouse gases and, according to a study conducted by the National Academy of Sciences, the Montreal Protocol has prevented the equivalent of 135 billion metric tons of carbon dioxide since 1990. That is 10 times more greenhouse gas reductions than has been achieved by the 1997 Kyoto Protocol that Gore helped negotiate.

    Had President Reagan not heeded the advice of climate scientists and acted on the best available research at the time about ozone depletion—which was far less solid than the current state of knowledge about climate change—the climate change problem we face today would be even more daunting.

    The Good Steward

    There is a common perception that the Reagan Administration marked a shift away from environmental protection. While it is true that some officials within the Reagan Administration were vocal critics of environmental regulation, President Reagan himself was very much influenced by the conservation ethic of traditional conservatism and was more stewardship-minded than those on either the right or the left give him credit for.

    Reagan talked a lot about having balanced policies that do not go too far towards one extreme or another. Today, when someone speaks of balance related to policy issues, it typically means that they want the policy to tilt more to their liking. When Reagan talked about balance, he meant it sincerely.

    While he once complained that environmental groups were trying to turn the White House into a bird’s nest, he also said, “There are also people in the country that believe that they won’t be satisfied unless they can pave over the entire countryside.”

    In a 1982 interview with the Los Angeles Times, Reagan said, “I fancy myself an environmentalist” and there is a lot in his record as president and as governor of California to support that statement.

    In a 1984 radio address to the nation, Reagan took credit for the strong action he took in California to combat smog, saying:

    I’m proud of having been one of the first to recognize that States and the Federal Government have a duty to protect our natural resources from the damaging effects of pollution that can accompany industrial development.

    Despite all of the efforts, from the right and the left, to revise history by ignoring or misrepresenting Reagan’s environmental accomplishments, an honest look at his record reveals a good steward who fought to safeguard our natural heritage.

    On issues ranging from ill-advised dams and highways, to air pollution and water quality, Reagan rose to the occasion.

    He sided with climate scientists over skeptics and firmly dealt with the threat of ozone depletion.

    His work to tackle the acid rain problem spawned a more market-friendly approach to pollution control called cap and trade.

    So, how can anyone honestly believe that Ronald Reagan would not rise to the occasion and effectively tackle climate change as well?

    Limbaugh, Beck, and copycat talk show hosts can rant all day and pretend they are channeling Reagan, but they are not. They cannot, because they utterly lack the conservative stewardship ethic that made Reagan the great leader he was.

    If you really want to know what Reagan would do about climate change, the best advice is to take an honest look at his record.

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  19. Marten Purdy
    Marten Purdy 12 January, 2013, 11:04

    Cap and Trade is a corporate program to help reduce co2 emissions by 2050. It works by the government giving away permits to large companies that make a huge amount of the co2 emissions. As time goes by, the government gives away less permits, thus less co2. The energy will then be replaced by solar and wind energy. By the time this plan is over, emissions will be reduced by 80 percent.

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