The price of the pollution allotments is determined by supply and demand. A commodity market, like the commodity exchanges for oil and grains, facilitates the trading.
The Bush administration is dead-set against the McCain-Lieberman proposal on the grounds that it would stifle corporate expansion. Although the proposal has not attracted broad support from industry, many observers predict that it is clearing the way for a similar measure to pass in the future.
"In a way, it's the start of a long campaign," said Eileen Claussen, executive director of the Pew Center on Global Climate Change, an independent foundation that works with Fortune 500 companies seeking solutions to global warming. "Eventually, we will have a bill that will require emissions reductions. You have to start somewhere."
A so-called cap-and-trade program for global warming pollution would be modeled after the successful acid rain program, part of the 1990 Clean Air Act, which has slashed sulfur dioxide emissions from power plants.
But not all market-based efforts to cut pollution have succeeded. Southern California's Regional Clean Air Incentives Market, or RECLAIM, was supposed to clean up smog-causing pollutants in the region, but the program has been widely judged as a major disappointment.
Global warming is generally thought to be caused by increasing concentrations of certain gases, including carbon dioxide, methane, nitrous oxide and water vapor, in the Earth's atmosphere. The gases trap solar heat, causing surface temperatures to rise.
Most scientists say the human contribution to the problem -- through releasing greenhouse gases and cutting down trees that inhale carbon dioxide -- is a major one. They predict profound long-term environmental effects: melting glaciers, increased drought in semiarid regions and rising seas near coastal areas.
So far, the Bush administration has rejected mandatory measures to regulate greenhouse gas emissions. During his 2000 campaign, George W. Bush pledged to regulate emissions of carbon dioxide from power plants. But soon after taking office, he reversed himself because of concerns that a government mandate would harm the economy and cripple coal-fired power generation, a major emitter of carbon dioxide, the most common greenhouse gas produced by human activities.
Bush also removed the United States from the international negotiations aimed at addressing global warming that resulted in the Kyoto Treaty.
