Raters' Role in Environmental Trading

Climate Solutions Special Issue
A version of this article appears in the Climate Solutions Special Issue issue of Home Energy Magazine.
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January 01, 2008
Environmentalists, ordinary citizens, and some politicians are becoming increasingly alarmed by the effects of climate change, and are loudly calling for federal and state governments to adopt serious policies to combat it. It is vital that the rating community be at the forefront of these efforts, for both altruistic and financial reasons. First, raters bring invaluable skills to all efforts to reduce greenhouse gas emissions (GHG) from the building sector. And second, combating climate change offers raters many valuable business opportunities. One opportunity that will surely benefit the building and rating industry is environmental trading. Environmental trading takes a market-based approach to removing pollutants from the environment. Rather than simply being required to reduce pollutant emissions to meet a regulated target, under a market-based approach companies and utilities are given a choice. They can meet a regulated target either by reducing their own emissions or by buying credits from companies that have reduced their emissions below the required level. This approach is also known as a cap-and-trade policy, because a cap is set on permitted emissions levels, and companies can choose either to meet that cap or to trade allowances in order to stay in regulatory compliance. Markets for trading ...

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