A Call to Action on Cap and Trade: The State of Green Business-Chicago

By not having a national carbon cap-and-trade policy, the United States is losing out on its chance to become a green and clean technology leader, said Richard Sandor, founder of the Chicago Climate Exchange.

Speaking at the State of Green Business Forum in Chicago, Sandor urged the attendees to do whatever they can to push for a national cap-and-trade program.

After giving a quick history of where value creation for businesses came from in past decades, he said that the next big area for value creation will be in the commoditization of air and water. And they will be made commodities through cap and trade.

In the case of carbon, that would set quotas for carbon emissions, and those who exceed their quotas can trade those extra cuts to those that are unable to meet their own quotas.

Cap-and-trade is nothing new to the U.S., as Sandor explained how it was implemented to bring down acid rain.

The Chicago Climate Exchange, which includes some 400 companies, is now the largest cap-and-trade market in the world. Its members have reduced emission by 400 million tons, an amount larger than France's nationwide emissions.

"What motivated these people?" he said, " It was all about the price signal. The price signal is what motivates individual inventors and companies."

The longer that it takes the U.S. to develop a policy, the more time and interest companies and other entities lose. And the more the U.S. falls behind other countries.

Just today, it was announced that Citigroup and Russian gas company OAO Gazprom purchased energy-intensity credits from three utilities in Tianjin, China, that exceeded efficiency targets, an act that is seen as a precursor to wider-scale carbon trading in the country.

Carbon cap-and-trade, he said, will create jobs, provide business and social value and will be necessary for the future, carbon-constrained world. Although the U.S.'s first steps in cap-and-trade might not be perfect, Sandor said, it can always be improved.

"Never let the perfect be the enemy of the good," he said.