Predictions are hazardous, but here is a prediction: Within the next five years, the United States will adopt a national cap-and-trade program for greenhouse gases, modelled on the highly successful acid deposition program. The national cap will ensure significant emissions reductions as compared to what would emerge from the "business as usual" scenario. It will build on the recent California initiative on greenhouse gas emissions.
This is a risky prediction, and here is why. From the standpoint of the United States alone, the costs of a national cap-and-trade program are highly likely to exceed the benefits. The magnitude of the costs will depend on the cap, but any plausible program will impose nontrivial costs. By contrast, the benefits, for the United States and the world, are likely to be low, because a purely domestic program will produce minimal reductions in anticipated warming by (say) 2100.
To see why, note that the United States accounts for only about 20% of the world's annual emissions, and in developing countries, emissions are growing at an exceedingly rapid rate. (China is expected to pass the United States as early as 2009.) Because warming depends on the existing "stock" of emissions as well as the current "flow," a purely domestic program that cuts emissions by (say) 10%, or even 20%, as compared to business as usual will have a quite small effect on climate change.
I am predicting, then, that the United States will adopt a domestic program that imposes significant domestic costs for insignificant domestic gains. The major reason for the prediction is the emerging consensus, across political divisions, that the United States has to do something about global warming, and sooner rather than later. If the program is well-designed, it won't inflict large damage on the economy. And the consensus has moral motivations: The United States is both wealthy and the major contributor to the existing "stock" of greenhouse gas emissions.
The hope, or the bet, is that such a program might help spur a much broader effort to control greenhouse gas emissions, including (among others) China and India. As many economists now agree, a sensible broader program, including cap-and-trade, would have world-wide benefits in excess of world-wide costs. A domestic initiative by the United States would be an important step toward that broader program.