This is often confusing to people, so it's worth quoting Howard Gleckman when he says, "All three candidates have endorsed what has become known as a 'cap and trade' energy policy. Now, Cap’n Trade may sound like the name of a second-rate seafood restaurant. But it is really just Washington-speak for 'really big energy tax increase.'" As Gleckman goes on to detail, there are ways of structuring Cap and trade that advantage government and ways of structuring it that advantage energy companies, but when you move downstream, the effect is the same: Higher energy prices result in higher prices to consumers which result in less demand for energy intensive goods which reduces production of those goods and lowers total energy usage. Now, it's not all pain. It also pushes towards more investment in renewables and creates a larger market for non-energy intensive goods, so lots of new alternatives might be developed. But in the aggregate, cap and trade makes energy more expensive so that people can afford to use less of it. That's the theory, at least.
