a market-based cap and trade system make it worthwhile to mention. First, a.

             market-based trade scheme means that cap and trade has low transaction.

             costs. By allowing the market to make each transaction more efficient, the.

             greatest reductions are usually where emissions are highest, or when.

             polluters who can afford to be more efficient benefit the most from the cap.

             and trade system. Second, cap and trade assumes that any reduction in.

             carbon emissions is beneficial for the planet, regardless of where the.

             reduction comes from. However, this can lead to ethical issues. For.

             example, if a region of the world can invest in more efficient forms of.

             energy because it can afford it, then other regions of the world will.

             invariably suffer because they cannot afford it. Although cap and trade and.

             other emissions trading schemes incentivize cleaner forms of energy, it.

             also gives it to who whoever can provide it best (not necessarily where the.

             reductions are needed most) (Bayon 3). Third, cap and trade may help.

             encourage more local policies, which affect regional trading. For example,.

             a law in one city that requires big businesses to invest in clean energy.

             can affect how those businesses trade within the larger region.

             .

             A market-based program like cap and trade is only a fraction of the.

             solution, and the world must acknowledge that government also plays just an.

             important role in establishing parameters for polluters. The government.

             must first decide what the fixed quantity of allowable emissions is for.

             each compliance period, what types of sources they want to cover, and how.

             they will monitor, report, and verify emissions over time. Then, they must.

             decide how to initially distribute the emissions permits or allowances, how.

             to enable trading permits, and how to penalize those who fail to comply.

             with the law. If they find that trading is happening too fast (which may.

             possibly affect how efficient sources are getting) or too slow (which.