Cap-and-innovate to combat climate change

Congress must pass a strong climate bill. The House took an important step in June when it passed a measure with broad carbon-reduction provisions. Now the ball is in the Senate's court. No one, regardless of political ideology, will be completely satisfied with the final legislation, but this should not hold up progress. In the decades to come, Congress will need to revisit climate change many times and adjust the law as necessary.

For now, the most important thing is to put a price on carbon, a price that reflects the true cost to the planet of emitting greenhouse gases. This is why a cap-and-trade system — whereby overall emissions are limited, and companies may buy and sell emissions allowances from one another — must be the cornerstone of climate legislation.

Cap-and-trade could be called cap-and-innovate. Setting a price for carbon emissions won't just build momentum for an international climate accord; equally important, it will give companies an economic foundation for investments in energy efficiency and clean energy, unleashing the innovation that only a well-functioning market can provide.

Unless such a climate bill becomes law soon, our country will slip further behind in the competition to shape the world's energy future. Renewable energy technology is advancing quickly in Europe and Asia, giving other countries critical first-mover advantages. Germany and Great Britain have robust offshore wind industries. Israel and Denmark are deploying electric vehicle infrastructures. China is becoming the world's primary source for solar panels. Of the more than 50 nuclear plants under construction around the world, only one is in the United States.

If we take steps to combat climate change now — starting with cap-and-trade legislation — we will come out ahead in many respects. We will become less dependent on foreign energy. We will create green jobs. And we will foster technological innovation that can be applied elsewhere.

Ralph Izzo is the chairman, president and chief executive of the Public Service Enterprise Group, an energy company. He began his career as a research scientist at the Princeton Plasma Physics Laboratory.

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