Ways to Reduce Carbon Dioxide Emissions

There are three primary methods for reducing the amount of carbon dioxide in the atmosphere:
employing energy efficiency and conservation practices; using carbon-free or reduced-carbon
energy resources; and capturing and storing carbon either from fossil fuels or from the
atmosphere.

Efficiency and Conservation

There are many energy efficiency and conservation practices that reduce the consumption of
carbon-based fuels (e.g., natural gas (glossary term) , oil, coal, or gasoline), decreasing carbon
dioxide (glossary term) emissions.

Carbon-Free and Reduced-Carbon Energy Sources

Another way to reduce carbon dioxide emissions is to use carbon-free or reduced-carbon sources
of energy. Carbon-free sources of energy have their own associated impacts, but in general, these
technologies generate energy without producing and emitting carbon dioxide to the atmosphere.
Carbon-free energy sources include solar power, wind power, geothermal energy, low-head
hydropower, hydrokinetics (e.g., wave and tidal power), and nuclear power. Alternatively,
switching from high-carbon fuels like coal and oil, to reduced-carbon fuels such as natural gas, will
also result in reduced carbon dioxide emissions. The extent to which biomass energy is considered
to be carbon-free or a reduced-carbon fuel depends on the type of biomass (glossary term) used
and the processes by which it is converted to energy (for more discussion on this, see the section
on Biomass Energy Operational Impacts to Air Quality).

Carbon Capture and Sequestration

A third option for reducing carbon dioxide in the atmosphere is carbon sequestration. Carbon
sequestration involves the capture and storage of carbon dioxide that would otherwise be present
in the atmosphere, contributing to the greenhouse effect (glossary term) . As described on the
Carbon Sequestration Approaches and Technologies page, carbon dioxide can be removed from
the atmosphere and retained (stored) within plants and soil supporting the plants. Alternatively,
carbon dioxide can be captured (either before or after fossil fuel (glossary term) is burned) and
then be stored (sequestered) within the earth.

Cap and Trade and Market-Based Controls

In the face of growing concerns about global warming (glossary term) , efforts to reduce carbon
dioxide emissions (and, to a lesser extent, the emissions of other greenhouse gases (glossary term)
[GHGs]) are being introduced in the United States and elsewhere. Within the U.S., the approaches
used to reduce the amount of carbon dioxide emitted to the atmosphere vary. Some states rely on
a command-and-control approach involving regulations that control carbon dioxide emissions. For
example, the Regional Greenhouse Gas Initiative (RGGI), a program for electric utilities in 10
Northeastern and Atlantic seaboard States, is a state-mandated cap-and-trade system with a goal
of reducing carbon dioxide emissions 10 percent by 2018. The figure to the right depicts the states
involved in the RGGI.

In general, in a cap-and-trade system, an entity (like a state regulatory agency) establishes an
overall cap for carbon dioxide emissions within its region. Participants receive permits, also known
as "allowances," to emit carbon dioxide up to that limit. Participants in the RGGI can also purchase
"carbon-offset credits" to help meet a carbon dioxide target. A carbon-offset credit is a kind of a
certificate stipulating that a certain amount of greenhouse gas was eliminated or avoided. Such
credits are created by projects that control carbon dioxide emissions or that sequester carbon
dioxide. As noted, the RGGI is limited to a 10-state area, but Congress is working on climate-
change legislation that could involve a nationwide cap-and-trade system.

Voluntary Carbon Dioxide Cap and Trade Approaches

Voluntary approaches based upon buying and selling avoided carbon dioxide emissions in
specialized markets like the Chicago Mercantile Exchange (CME) are also used to control GHG
emissions. The Chicago Climate Exchange (CCX), which is owned by the CME, was launched in
2003. Upon joining the CCX, members agree to voluntarily achieve a given carbon dioxide emission
target. Members can meet the goal either by cutting emissions or, through the purchase of carbon
offset credits, proving that another CCX member cut emissions. Carbon offset credits are basically
allowances that have been generated by CCX members able to achieve their CCX-mediated carbon
dioxide targets. The credit amount is tied to the amount of carbon dioxide emissions the member
avoided beyond the target. The avoided carbon emissions are then sold to other CCX members,
thus allowing the purchaser(s) to achieve their agreed-upon CCX target(s). Carbon credits can be
generated by members or by nonmembers in CCX-approved carbon offset projects.

A number of factors could motivate someone to participate in a voluntary program like the CCX.
Industrial participants could view the voluntary carbon market as a way to minimize liabilities and
future compliance costs. Investors or entities with the capability to legitimately sequester carbon
dioxide may join the exchange because of the potential for profit. Retail participants could view
participation as a way to purchase "carbon neutrality." For example, one could calculate the
amount of carbon dioxide that would be generated during a plane flight and reduce or eliminate
that amount of carbon dioxide by purchasing a carbon offset on the CCX.