Carbon taxes, cap-and-trade administration, and US legislation

William Whitesell

Climate Policy, 2007, vol. 7, issue 5, 457-462

Abstract: An upstream cap-and-trade system that rations allowances for the carbon content of fuel inputs could achieve wider coverage than existing CO 2 emission programmes or most of those proposed in draft US legislation, but would risk shortages and price spikes. Allowance price volatility could be avoided with a CO 2 -price corridor established through auctions, similar in some respects to how central banks manage short-term interest rates with open market operations. Building on the central bank analogy, a Greenhouse Gas Board could be established with the 'instrument independence' to set annual CO 2 -price corridors in line with broadly-framed, long-term climate goals laid out in legislation. National and regional Boards of this nature might also help facilitate the international coordination of climate policies.

Date: 2007
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DOI: 10.1080/14693062.2007.9685668

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