Managing Costs in a U.S. Greenhouse Gas Trading Program: A Workshop Summary

Marika Tatsutani and William Pizer

RFF Working Paper Series from Resources for the Future

Abstract: Cost containment has emerged as a major point of contention in the current congressional debate about designing a cap-and-trade program to limit future U.S. greenhouse gas (GHG) emissions. This paper reviews basic concepts and policy options for cost management, drawing on a March 2008 workshop sponsored by Resources for the Future (RFF), the National Commission on Energy Policy, and Duke University’s Nicholas Institute for Environmental Policy Solutions. The different sources and temporal dimensions of cost uncertainty are explored, along with possible mechanisms for addressing short- and long-term cost concerns, including banking and borrowing, emissions offsets, a price cap (or safety valve), quantity-limited allowance reserve, and the concept of an oversight entity for GHG allowance markets modeled on the Federal Reserve. Recognizing that the inherent trade-off between environmental certainty and cost certainty has no perfect solution, the paper nonetheless concludes that numerous options exist for striking a reasonable and politically viable balance between these two objectives. In the effort to forge consensus around a particular set of options, it will be important for policymakers to strive to fit the remedy to the problem they are trying to solve and to preserve the underlying integrity of the overall program in terms of its long-term ability to sustain meaningful market incentives for low-carbon technologies.

Keywords: cost containment; greenhouse gases; cap-and-trade; safety valve; allowance reserve; uncertainty; banking and borrowing; offsets; price volatility; carbon Fed (search for similar items in EconPapers)
Date: 2008-07-01
New Economics Papers: this item is included in nep-env
References: Add references at CitEc
Citations: View citations in EconPapers (19)

Downloads: (external link)
http://www.rff.org/RFF/documents/RFF-DP-08-23.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.rff.org/RFF/documents/RFF-DP-08-23.pdf [301 Moved Permanently]--> https://www.rff.org/RFF/documents/RFF-DP-08-23.pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:rff:dpaper:dp-08-23

Access Statistics for this paper

More papers in RFF Working Paper Series from Resources for the Future Contact information at EDIRC.
Bibliographic data for series maintained by Resources for the Future ().