In the 90's, environmentalists could celebrate at least one success story: the "cap and trade" system, a market-inspired strategy for reducing harmful factory emissions. The way it works is simple. Companies that want to produce emissions beyond the legal limit are allowed to buy the right to release additional emissions from companies that have managed to keep their own emissions below the limit. Recently, Karl Ulrich, a professor at the Wharton School of the University of Pennsylvania, introduced a microversion of the same policy - only applied to individual automobiles as opposed to factories. It allows a socially conscious driver to cancel out the environmental damage caused by his car.
The system is called TerraPass. If a driver can't stomach the thought of trading in his sleek S.U.V. for a more-fuel-efficient but less-than-thrilling station wagon, he can pay a fee to a company that is also called TerraPass. The company then allocates the money to reduce industrial carbon dioxide emissions, support renewable energy like wind farms and purchase (but not use) pollution credits from companies, among other environmentally conscious endeavors. The fee is proportional to a car's carbon dioxide emissions - approximately $80 a year in the case of an S.U.V.
Officially introduced just over a year ago, the company has sold TerraPasses, which take the form of a small decal that drivers can put on their windshields, to approximately 2,300 people (some of them not even car owners). The decals announce that a driver is more environmentally concerned than his choice of transportation might otherwise suggest. The company takes a small cut of its sales, taking advantage of the apparently healthy market for guilt reduction.
Although TerraPass certainly works on a free-market principle, it's lacking the element of naked self-interest that would drive a truly global change. A more exact parallel to the cap-and-trade system would be one in which drivers who saved fuel by moseying down a 60 miles-per-hour lane could accrue electronic passes they could sell the next morning on eBay to whoever needed to dart to work or the airport that morning at 70 m.p.h. The market for environmental righteousness may be growing, but surely not as fast as the market for speed.
http://www.nytimes.com/2005/12/11/magazine/11ideas_section4-20.html