(C.) Potential Applications for Cap and Trade
As stated earlier, cap and trade is viewed by many as a model that may be appropriate for other environmental programs on a regional or global scale. Recently, cap and trade is being examined in the context of two other environmental problems: ozone transport and global climate change.
Ozone Transport
The regional problem of ground-level ozone in the Northeast, which is being addressed
by the Ozone Transport Commission and its cap and trade program, is only partly caused
by polluting sources from that area. Major coal burning power plants in the Midwest
and South are releasing NOx into the atmosphere, which is being carried eastward
on prevailing winds.
Seeking to stem the effects of ground level ozone on human health and the
environment, policy makers were again looking for a regional solution—but one that would extend
its parameters borders to reach all relevant sources. As a result, the 37 eastern-most
states in the country 
joined with industry, environmentalists, and the EPA to address the
issue of long-range transport of NOx emissions. The interested parties formed the
Ozone Transport Assessment Group, and in September 1998, EPA promulgated a rule
seeking additional NOx emissions reductions to address
the problem of ozone transport. This rule making
is commonly known as the NOx SIP Call.
Under the Clean Air Act, all states have to prepare SIPs or state implementation plans. The NOx SIP call requires the twenty-two eastern most states to include provisions for addressing ozone transport in their SIPs. NOx emissions reductions are to be achieved by the 2003 compliance season. Levels of NOx emissions are to be cut by 28% or by 1.1 million tons a year. The EPA rule allows states to consider cap and trade programs in their SIPs.
Climate Change
Global climate change could have a very profound impact on the way we live our
lives, and stakeholders around the world are looking for effective and pragmatic
solutions. Human activities like burning fossil fuels in cars, airplanes, and in power generation
are releasing greenhouse gases. The accumulation of greenhouse gases in the atmosphere
are thought to contribute to a rise in worldwide temperatures. The greenhouse effect
occurs when greenhouse gases act like a blanket and trap heat from the sun that
would otherwise escape back out into space