| ||||||||||||||||||||||||||||||||||||||||||||||||||
This article appears in the following Oxford Review of Economic Policy issue: CLIMATE CHANGE [View the issue table of contents]
Addressing climate change with a comprehensive US cap-and-trade system
* John F. Kennedy School of Government, Harvard University, National Bureau of Economic Research, and Resources for the Future, e-mail: robert_stavins{at}harvard.edu
 |
Abstract |
|---|
There is growing impetus for a domestic US climate policy that can provide meaningful reductions in emissions of carbon dioxide (CO2) and other greenhouse gases. I describe and analyse an up-stream, economy-wide CO2 cap-and-trade system which implements a gradual trajectory of emissions reductions (with inclusion over time of non-CO2 greenhouse gases), and includes mechanisms to reduce cost uncertainty. Initially, half of the allowances are allocated through auction and half through free distribution, with the share being auctioned gradually increasing to 100 per cent over 25 years. The system provides for linkage with emission-reduction credit projects in other countries, harmonization over time with effective cap-and-trade systems in other countries and regions, and appropriate linkage with actions taken in other countries, in order to establish a level playing field among domestically produced and imported products.
Key Words: cap-and-trade system • carbon dioxide • greenhouse gas emissions • global climate change • carbon taxes
1 Massachusetts et al. v. Environmental Protection Agency et al., No. 05-1120, argued 29 November 2006, decided 2 April 2007.
2 For a timely discussion of relevant auction design issues in carbon markets, see Burtraw et al. (2007).
3 ‘Commensurate action’ is defined as other countries taking action that is globally cost-effective, for example by employing cap-and-trade systems with the same allowance price or equivalent carbon taxes.
4 For discussion of the temporal dimension of climate policy, see Helm et al. (2005).
CiteULike 
Connotea 
Del.icio.us What's this?
This article has been cited by other articles:
|
|
 |
|
  D. Helm Climate-change policy: why has so little been achieved? Oxf. Rev. Econ. Policy, June 1, 2008; 24(2): 211 - 238. [Abstract] [Full Text] [PDF]
|
|