Balancing Cost and Emissions Certainty: An Allowance Reserve for Cap-and-Trade
نویسندگان
چکیده
On efficiency grounds, the economics community has to date tended to emphasize price-based policies to address climate change—such as taxes or a “safety-valve” price ceiling for cap-and-trade— while environmental advocates have sought a more clear quantitative limit on emissions. This paper presents a simple modification to the idea of a safety valve: a quantitative limit that we call the allowance reserve. Importantly, this idea may bridge the gap between competing interests and potentially improve efficiency relative to tax or other price-based policies. The last point highlights the deficiencies in several previous studies of price and quantity controls for climate change that do not adequately capture the dynamic opportunities within a cap-and-trade system for allowance banking, borrowing, and intertemporal arbitrage in response to unfolding information.
منابع مشابه
Nber Working Paper Series Balancing Cost and Emissions Certainty: an Allowance Reserve for Cap-and-trade
On efficiency grounds, the economics community has to date tended to emphasize price-based policies to address climate change -such as taxes or a "safety-valve" price ceiling for cap-and-trade -while environmental advocates have sought a more clear quantitative limit on emissions. This paper presents a simple modification to the idea of a safety valve: a quantitative limit that we call the allo...
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