By Francesca Morland | US Environmental Policy Student<\/p>\n\n\n\n
To ensure long-term economic stability, countries must de-risk their economies from the threat of climate change. This requires large-scale decarbonisation[1]<\/a>. For the US, achieving energy and economic security hinges on transitioning to a low-carbon economy1<\/sup>. This effort must be coordinated at the federal level. A strategy that I believe is central to this transition is the implementation of a national Emissions Trading System (ETS). This approach promotes economic efficiency, innovation, and technological readiness while delivering real reductions in CO\u2082 emissions and reducing reliance on fossil fuels[2]<\/a>.<\/p>\n\n\n\n The US already has glimpses of ETSs through state and regional programs, such as California\u2019s Cap and Trade system and the Regional Greenhouse Gas Initiative (RGGI). These systems are evidence that emissions trading is feasible and can gain public and political support. Established in 2009, RGGI is composed of 11 northeastern states, capping carbon dioxide emissions from the power sector[3]<\/a>. Power plants must purchase allowances through auctions with the stringency of the cap tightening over time. Since its inception, RGGI has reduced power sector emissions by over 50% (as of 2021), outperforming the rest of the country. It has raised over $8.6 billion (as of 2021) for participating states. A large proportion of this capital has been reinvested in clean energy, efficiency programs and consumer bill assistance[4]<\/a>. This illustrates how an ETS can benefit both the environment and the economy.<\/p>\n\n\n\n However, state-level initiatives like RGGI, with limited emission coverage (only the power sector) create a fragmented \u201cpatchwork\u201d of climate policy. Large regions in the South and Midwest of the US remain unregulated, many of which rank lowest in environmental performance[5]<\/a>. This lack of nationwide coverage limits the effectiveness of existing efforts. A national ETS would eliminate geographic and sectoral gaps and provide consistency for businesses and investors.<\/p>\n\n\n\n Climate Obligations and Economic Rationality<\/strong><\/p>\n\n\n\n The US has made climate commitments through the Paris Accord, pledging to an economy-wide target of reducing its net greenhouse gas emissions by 61-66% below 2005 levels in 2035, under its Nationally Determined Contributions (NDCs)[6]<\/a>. But even if climate goals aren’t a current political priority, economic logic still leads to the same conclusion: the US must decarbonise the economy in order to remain competitive, secure, and resilient[7]<\/a>. Emission reduction isn’t just about climate – it\u2019s about future-proofing the economy, attracting green investment and avoiding costly damages from extreme weather or health burdens7<\/sup>. A well-designed ETS encourages innovation via demanding decarbonisation which in turn creates jobs and spurs economic growth[8]<\/a>.<\/p>\n\n\n\n ETS vs. Carbon Tax: Why ETS Is Best for the U.S.<\/strong><\/p>\n\n\n\n Another popular emissions abatement strategy is the carbon tax a non-market mechanism that charges emitters a fixed rate per ton of CO\u2082. While effective in some countries, a meta-analysis published in ScienceDirect<\/em> found that national conditions (e.g., GDP growth and financial market development) heavily influence the success of carbon pricing strategies[9]<\/a>. The study concluded that an ETS is better suited to the US context in comparison to a carbon tax, due to the flexibility it allows businesses and its compatibility with market-based innovation9<\/sup>. Many successful countries use hybrid models, but for the US, an ETS offers the best standalone path to scalable, cost-effective decarbonisation9<\/sup>.<\/p>\n\n\n\n Learning from U.S. History<\/strong><\/p>\n\n\n\n To understand the best way to approach implementation of a national ETS it is important to learn from past US proposed legislation, policy and systems since the idea of a US ETS is not a novel one.<\/p>\n\n\n\n The Kerry-Graham-Lieberman (KGL) Bill represents a serious bipartisan attempt to pass a national cap and trade system in the US[10]<\/a>. Despite its collapse, it proves that a federal ETS is politically possible. The bill failed not due to policy flaws, but because of; partisan resistance, especially as opponents mischaracterised it as a \u201ctax\u201d; industry influence, with oil, gas, and utilities lobbying to shape or stall the bill; weak executive support and mixed messaging from the White House10<\/sup>. In short, the KGL bill shows that with stronger leadership and clearer communication, a national ETS could pass through Congress, in comparison to state-level approaches that cannot achieve the same scale or coherence.<\/p>\n\n\n\n American Clean Energy and Security Act 2009 (Waxman-Markey (2009))<\/strong><\/p>\n\n\n\n The American Clean Energy and Security Act 2009 is a House-passed bill that aimed to reduce greenhouse gas emissions by 17% by 2020 and 83% by 2050 (of 2005 levels)[11]<\/a>. This bill included consumer protections, industry transition provisions and proposed nationwide carbon pricing11<\/sup>. Despite passing in the House, the bill never made it to a Senate vote. It stalled due to economic fears, industry lobbying and the prioritisation of healthcare reform during the Obama administration[12]<\/a>. This failure wasn\u2019t due to the structure of the bill but due to political calculation and distraction12<\/sup>. Had it passed, the US would have had a national ETS for over 15 years by now. This delay has cost both in climate progress and economic opportunity, increasing climate and economic risk which reduce the country\u2019s ability to withstand future uncertainties. The Waxman-Markey bill sets an important precedent that creates pathway of feasibility for a nationalised ETS and demonstrates that this strategy was once considered politically achievable12<\/sup>. Mechanisms included in the bill addressed economic fairness through free permits to utilities and consumer protection rebates11<\/sup>. The Waxman-Markey bill provides a blueprint-one that can be improved with modern tools and better public engagement.<\/p>\n\n\n\n The Case for a National ETS<\/strong><\/p>\n\n\n\n A national ETS stands out for three main reasons economic efficiency, technological readiness and political momentum2<\/sup>. A market-based ETS allows emitters to choose the least cost method of compliance. Abatement can be achieved by reducing emissions, innovating processes or purchasing allowances2<\/sup>. This flexibility drives innovation and keeps costs low. Furthermore, leveraging tools like blockchain technology can boost transparency and enforce compliance therefore, making today’s ETS more efficient than before[13]<\/a>. In addition, I believe with rising bipartisan awareness of climate risk coupled with global pressures like the EU\u2019s Carbon Border Adjustment Mechanism (CBAM), the US faces both opportunity and necessity to lead[14]<\/a>.<\/p>\n\n\n\n A national ETS is no longer a radical idea. It is practical, tested and aligned with both climate responsibility and economic strategy[15]<\/a>. We\u2019ve seen it nearly succeed before. We’ve seen it succeed at the state level. Now, the US must go further with federal legislation that puts the economy on a more sustainable path.<\/p>\n\n\n\n [1]<\/a> \u201cDecarbonization Improves Energy Security for Most Countries, Study Finds.\u201d 2025. Stanford Doerr School of Sustainability. April 9, 2025. https:\/\/sustainability.stanford.edu\/news\/decarbonization-improves-energy-security-most-countries-study-finds.<\/p>\n\n\n\n [2]<\/a> Eden, Alexander, Charlotte Unger, William Acworth, Kristian Wilkening, Constanze Haug, ICAP, California Air Resources Board, et al. 2018. \u201cBenefits of Emissions Trading.\u201d International Carbon Action Partnership<\/em>. https:\/\/icapcarbonaction.com\/system\/files\/document\/benefits-of-ets_updated-august-2018.pdf.<\/p>\n\n\n\n [3]<\/a> \u201cWelcome | RGGI, Inc.\u201d 2025. April 8, 2025. https:\/\/www.rggi.org\/.<\/p>\n\n\n\n [4]<\/a> Regional Greenhouse Gas Initiative. 2025. \u201cAbout the Regional Greenhouse Gas Initiative.\u201d The Regional Greenhouse Gas Initiative<\/em>, January. https:\/\/www.rggi.org\/sites\/default\/files\/Uploads\/Fact%20Sheets\/RGGI_101_Factsheet.pdf.<\/p>\n\n\n\n [5]<\/a> Kiernan, John S. n.d. \u201cGreenest States in 2025.\u201d WalletHub. https:\/\/wallethub.com\/edu\/greenest-states\/11987.<\/p>\n\n\n\n [6]<\/a> THE UNITED STATES OF AMERICA. n.d. \u201cTHE UNITED STATES OF AMERICA NATIONALLY DETERMINED CONTRIBUTION REDUCING GREENHOUSE GASES IN THE UNITED STATES: A 2035 EMISSIONS TARGET.\u201d THE UNITED STATES OF AMERICA NATIONALLY DETERMINED CONTRIBUTION REDUCING GREENHOUSE GASES IN THE UNITED STATES: A 2035 EMISSIONS TARGET<\/em>.<\/p>\n\n\n\n [7]<\/a> Action Zero. 2022. \u201cWhy Is Decarbonisation Important? – Action Zero.\u201d March 24, 2022. https:\/\/actionzero.com\/knowledge-base\/why-is-decarbonisation-important\/.<\/p>\n\n\n\n [8]<\/a> \u201cDecarbonization.\u201d 2024. Energy.Gov. September 17, 2024. https:\/\/www.energy.gov\/topics\/decarbonization.<\/p>\n\n\n\n [9]<\/a> Ahmad, Maqsood, Xiaohui Fiona Li, and Qiang Wu. “Carbon taxes and emission trading systems: which one is more effective in reducing carbon emissions?\u2014a meta-analysis.” Journal of Cleaner Production<\/em> (2024): 143761.<\/p>\n\n\n\n [10]<\/a> Lizza, Ryan. 2010. \u201cAs The World Burns.\u201d The New Yorker<\/em>, October 3, 2010. https:\/\/www.newyorker.com\/magazine\/2010\/10\/11\/as-the-world-burns.<\/p>\n\n\n\n [11]<\/a> \u201cH.R.2454 – American Clean Energy And Security Act of 2009.\u201d 2009. Congress.Gov. May 15, 2009. Accessed April 22, 2025. https:\/\/www.congress.gov\/bill\/111th-congress\/house-bill\/2454.<\/p>\n\n\n\n [12]<\/a> Bogardus, Amanda Reilly Kevin. 2016. \u201c7 Years Later, Failed Waxman-Markey Bill Still Makes Waves.\u201d E&E News by POLITICO. June 27, 2016. https:\/\/www.eenews.net\/articles\/7-years-later-failed-waxman-markey-bill-still-makes-waves\/.<\/p>\n\n\n\n [13]<\/a> Boumaiza, Ameni, and Kenza Maher. “Leveraging blockchain technology to enhance transparency and efficiency in carbon trading markets.” International Journal of Electrical Power & Energy Systems<\/em> 162 (2024): 110225.<\/p>\n\n\n\n [14]<\/a> \u201cCarbon Border Adjustment Mechanism (CBAM): EU\u2019s Initiative to Combat Carbon Leakage | EU Chemicals Platform.\u201d n.d. https:\/\/transition-pathways.europa.eu\/green-transition\/carbon-border-adjustment-mechanism-cbam-eus-initiative-combat-carbon-leakage.<\/p>\n\n\n\n
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