How Regulatory Standards Can Affect a Cap-and-Trade Program for Greenhouse Gases
"Some legislation considered by the current and previous Congresses has proposed combining cap-and-trade programs with various regulatory standards to reduce
greenhouse-gas emissions. Greenhouse gases increase the amount of energy temporarily held in the lower atmosphere, keeping the Earth’s surface warmer than it would
otherwise be. Such gases include carbon dioxide, methane, nitrous oxide, and several compounds that contain fluorine and chlorine.1 Cap-and-trade programs would place explicit restrictions on annual emissions, and producers whose activities generate greenhouse gases would be required to hold permits, called allowances, to continue
to produce those emissions. The allowances would have economic value, and they would be tradeable among companies and by individual people..."