Issues in Designing U.S. Climate Change Policy

Joseph Aldy and William Pizer

RFF Working Paper Series from Resources for the Future

Abstract: Over the coming decades, the cost of U.S. climate change policy likely will be comparable to the total cost of all existing environmental regulation—perhaps 1–2 percent of national income. In order to avoid higher costs, policy efforts should create incentives for firms and individuals to pursue the cheapest climate change mitigation options over time, among all sectors, across national borders, and in the face of significant uncertainty. Well-designed national greenhouse gas mitigation policies can serve as the foundation for global efforts and as an example for emerging and developing countries. We present six key policy design issues that will determine the costs, cost-effectiveness, and distributional impacts of domestic climate policy: program scope, cost containment, offsets, revenues and allowance allocation, competitiveness, and R&D policy. We synthesize the literature on these design features, review the implications for the ongoing policy debate, and identify outstanding research questions that can inform policy development.

Keywords: cap-and-trade; carbon tax; cost containment; competitiveness (search for similar items in EconPapers)
JEL-codes: Q48 Q54 Q58 (search for similar items in EconPapers)
Date: 2008-06-23
New Economics Papers: this item is included in nep-ene and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Related works:
Journal Article: Issues in Designing U.S. Climate Change Policy (2009)
Journal Article: Issues in Designing U.S. Climate Change Policy (2009)
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