Cap-and-trade responses to climate change are in place in Europe and are in prospect in the US. All US presidential candidates believe climate change is a man-made problem that can be solved by reducing emissions of greenhouse gases (GHG). Before adopting a cap-and-trade system, the US should look closely at the European experience.Under a federal cap and trade, the government sets a limit or cap on GHG emissions as a lower percentage of current emissions, and allowances are distributed—either for free or through an auction—to emitting parties. They report all emissions, and at the end of a compliance period—say, 3 or 5 years—they surrender allowances equivalent to the...