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Weekly UpdatesOne option for reducing pollution and greenhouse gas emissions is a program called emissions trading, or "cap and trade." This type of program provides economic incentives to achieve reductions in emissions. Under this approach, regulated industries can buy and sell what are, in effect, permits to pollute. Usually a governmental agency will set a limit on the amount of pollutants a company or organization can emit.
Under the program, each company will be allocated a number of credits equal to its limit. Companies that reduce their emissions below the threshold can then sell or trade their credits to companies that exceed the cap.
A recognized successful implementation of such a program is EPA's Acid Rain Program, which has led to a significant, and more cost effective reduction in emission of sulfur dioxide, a precursor to acid rain. In the United States, only direct emitters such as power plants and utilities are allocated credits. They are then permitted to buy and sell credits, based on their ability to exceed the regulatory requirements. Some organizations have proposed allowing owners of real estate to participate in this type of program to encourage reduction in greenhouse gas emissions.
The feasibility of emissions trading for buildings is unknown. It would require all buildings to participate in energy audits to determine current emissions levels. Voluntary participation wouldn't work, as trade programs require all actors, both "good" and "bad," to participate. In addition, it will be hard to quantify direct versus indirect emissions.
Providing an economic incentive, in the form of credits, would encourage energy-efficiency improvements and assist in paying for those upgrades. IREM supports market-based incentives for energy efficiency. IREM supports federal funding of a cost/benefit analysis and research into the feasibility of an emissions trading program for the real estate industry.
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