Since 1990, US greenhouse gas emissions have increased about 2% every year, according to the Environmental Protection Agency (EPA). The air we are breathing right now is 60% more polluted than it was in 1989. In April 2021, President Biden pledged to reduce US greenhouse gas (GHG) production by at least half over the next nine years. We’re talking about a 50-52% emissions reduction by 2030. That target amount is more than double the most recent US commitment when we were still involved with the Paris Climate Agreement.
“This is the decisive decade,” Biden said at the virtual environmental summit. “This is the decade that we must make decisions to avoid the worst consequences of the climate crisis.”
Many environmental groups, “green” corporations and Biden’s voter base applaud his position. And of those who oppose it — well, no one is surprised. After all, an aggressive position on climate change was a big part of Biden’s election strategy and is a defining characteristic of the Democratic party. Still, it’s an awfully big promise to make.
Is a 50% Reduction in US Emissions an Achievable Goal?
Biden’s critics believe his promise is far-fetched. We’ve failed to reach many climate targets in the past. However, one doesn’t hear much about them in the media. We can find the facts if we dig deep.
Furthermore, some argue that since the US is responsible for only 15% of the world’s GHG pollution, it seems like an exercise in futility even if we can hit the target. What good is a 7.5% reduction in the overall global emissions if other nations continue to industrialize and ramp up their output?
Right now, major polluters like China and India give climate change and emissions lots of lip service but make no specific promises on percentages. Also, they’ve failed to reach many environmental targets.
The entire globe seems somewhat guilty of this. In 2020 the whole world failed to meet a single one of 20 Aichi Biodiversity Targets aimed at preserving ecosystems and the environment — for the second consecutive decade. Twenty years of global environmental failure! We don’t remember this being covered on any major news outlet.
Still, Biden isn’t the only world leader making big promises.
It’s worth noting that Yoshihide Suga, Japan’s Prime Minister, announced a target of a 46% emissions reduction by 2030. And Canada vowed to reduce emissions levels by at least 40% by 2030. British Prime Minister Boris Johnson pledged to reduce emissions by a staggering 78% by 2035.
Regardless of your political position, cleaner air is healthier air, or is it? Maybe a worthy debate for another time. But even if reducing emissions is “better”, is a 52% reduction over nine years even achievable? We’ll explore this question over the following few articles. The first concept to understand is carbon credits among polluters. We’ll cover that ground today. That will lead nicely into our next article on carbon trading, and a final piece will introduce you to some other ways people are hoping to offset emissions naturally.
How Do Carbon Credits Work?
Per Investopedia.com: “A carbon credit is a permit that allows [the organization] that holds it to emit a certain amount of carbon dioxide or other greenhouse gases.” One credit equals one ton (2,000 pounds) of carbon dioxide.
To put that in perspective, a vehicle achieving 25 miles per gallon produces about one pound of carbon dioxide per mile or one ton per 2,000 miles. And gas is light!
Now, the carbon credit system is part of the “cap-and-trade” program. Companies that pollute get a certain number of carbon credits equal to their standard pollution levels. In the beginning, they can operate as usual and continue to pollute up to their previous limit, but no more. Otherwise, they’ll be penalized in the form of a hefty fine.
The limit drops periodically, and each company gets fewer carbon credits. In the meantime, the company can sell unneeded carbon credits to another company that might be exceeding their credit allotment. Therefore, smaller private companies have twice the incentive to reduce GHG emissions:
- They will be fined a huge amount if they exceed the cap.
- They can make money reselling some of their carbon credits.
Ultimately, the goal is to allow polluting organizations to work together to lower overall industrial emissions. But many of those greenhouse gases come from energy creation.
Electricity production generates 25% of US emissions.
The only more significant US polluter is transportation, responsible for roughly 29% of our emissions. In the rankings, industry comes after energy generation. Manufacturing produces about 23% of our greenhouse gases in the states. Agriculture represents about 10% of our GHG.
On US Cap and Trade Programs Today

According to Investopedia.com, cap-and-trade programs are controversial in the US. In addition to the Clean Air Act, eleven states have adopted market-based approaches to reducing GHG emissions. Of them, ten are Eastern states that banded together to attack the problem through a program known as the Regional Greenhouse Gas Initiative. California, always progressive, has its own program.
The Regional Greenhouse Gas Initiative (RGGI)
Per RGGI.org, RGGI is the first mandatory market-based program in the US designed to reduce greenhouse gas emissions. It’s a cooperative effort among Maine, Connecticut, Delaware, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, Virginia, and Vermont to cap and reduce emissions coming specifically from the power/energy sector.
RGGI is currently working towards a goal of a GHG emissions reduction of 30% from 2020 to 2030. While this is an admirable goal, it’s just a little more than half of what President Biden asks. Also, there are 40 other states to consider.
California’s Cap-and-Trade Program
The “Golden State” has a reputation for progressive views and innovative technology. The state loves to go above and beyond federal requirements for environmental issues (holding my economic comments). So California launched its cap-and-trade program in 2013. The rules apply to the state’s large electric power plants, industrial plants, and fuel distributors. California claims its plan is the fourth largest in the world after the EU, South Korea, and the Guangdong province of China.
The Clean Air Act
The US has been attempting to control emissions since Section 112 of the Clean Air Act (CAA) passed in 1990. The Clean Air Act is considered the first cap-and-trade program, and it was launched to combat “acid rain,” which was so troublesome in the media in the 1980s.
Now that we know how these programs work and which industries are regulated most (and where), let’s think about potential hiccups in the system.
Consider 2020 — Could the Pandemic Muddy the Numbers?
Not as much as one might think.
- Throughout much of 2020, the global population spent a lot more time at home.
- Surprisingly, this only led to about a 9% drop in global emissions.
Think back to the point that a standard personal vehicle produces one ton of carbon dioxide every 2,000 miles. That’s six tons per commuting vehicle every year, on average. Now we can start to see how many tons of GHG energy production really creates! But even when humans stop driving to work, we still use a lot of electricity at home. Also, many plants were still operating around the world, creating those goods that still required transportation.
What’s next in the fight against climate change?
Eventually, the goal of cap-and-trade programs is to significantly reduce the amount of GHG major polluters are casting into the air. But some GHG is unavoidable unless we all stop eating, drinking, driving, and watching Netflix. Not only is that unlikely, but we also know it’s only a matter of time until third-world nations industrialize and begin their pollution journey.
So, the next piece of the puzzle seems to be carbon offsets. The idea is that we can use GHG absorbing materials or operations to improve our air quality and develop more energy-friendly means of manufacturing, transportation, and agriculture.
If you watched the third season of HBO’s series Westworld, you might be able to imagine a thickly-populated world of major cities covered in oxygen-producing flora. Public transportation is electric, and most ordinary people cannot afford a private vehicle. Moss hangs from the sides of skyscrapers. Dark alleys become aqua-gardens for fish and food. That imagined reality might not be far off. People are looking for natural ways to offset emissions, and moss-covered skyscrapers might become a reality for our children and grandchildren. I just don’t want to live in a dome…I need the ocean and this is another topic for another day.
In our next piece, we’ll take a closer look at carbon credit trading. How does Company A sell its excess carbon credits to Company B? And for how much? We’ll talk then about how individuals can start carbon offset trading to make a little dough and hopefully improve the environment — or let’s talk now.
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[…] trading is part of the energy industry now. In a previous post, we introduced you to the concepts of carbon credits and cap-and-trade programs. The notion was […]
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