Mixing and Matching Electricity Sector Policies

A number of concerns have emerged over the last decade about climate change, energy security, and energy efficiency, inspiring an equally long list of proposed policy fixes. The majority of these options, including renewables subsidies, performance standards, and emissions pricing schemes, apply directly to the power sector. Lawmakers can also choose to implement multiple policies […]

Flexibility and Cost-Effectiveness in Proposed Climate Policies

Achieving the goal of an 83 percent reduction in US carbon dioxide (CO2) emissionsfrom 2005 levels by 2050 will require the electricity sector—which accounts for roughly 40 percent of US CO2 emissions—to make an enormous pivot away from fossil fuels toward non-emitting sources. Policy will be required to achieve this goal. In a recent RFF […]

Preserving Flexibility

Decisions EPA is making today will have a major impact on the cost-effectiveness of its planned move to regulate carbon emissions from existing power plants. The agency has proposed and will soon finalize performance standards for new power plants. These new-source standards are a prerequisite for the planned existing-source standards, but are ostensibly otherwise unrelated […]

Fixing Emissions Trading Imbalances with a Price Floor

The centerpiece of Europe Union’s climate policy, the cap-and-trade Emissions Trading System (ETS), is being hobbled by a large oversupply of emissions allowances in the market. Since 2008, the ETS has rapidly accumulated a two gigaton surplus of allowances. The oversupply of allowances and low level of emissions is the result of a number of […]

Who Benefits from Flexible GHG Rules?

US climate policy is unfolding under the Clean Air Act. Mobile source and construction permitting regulations are in place. The US Environmental Protection Agency (EPA) has developed draft final rules for the performance of new power plants. Most important, EPA and the states will soon determine the form and stringency of the regulations for existing […]

Taxing Electricity’s Carbon Emissions at Social Cost

A national tax on carbon emissions would offer an opportunity for deficit reduction and/or tax reform, as well as climate change mitigation. Economists studying taxes on environmental harms, such as carbon emissions, often suggest that the tax be set according to the damage inflicted by the last unit of emissions. In the case of carbon, […]

Two World Views on Carbon Revenues

Traditionally, the value created from pricing pollution has been directed to the regulated industry, an approach called “grandfathering.” However, there has been a growing trend, especially when pricing carbon emissions, toward auctioning emissions permits and the direct payment of emissions fees. These approaches are more consistent with the polluter pays principle and cast carbon revenues […]

What Value Does a Potential Pacific Coast Carbon Price Have?

The governors of California, Oregon, and Washington and the premier of British Columbia signed a climate pact on Monday that announced the intent of two new carbon prices: a cap-and-trade system in Washington and, likely, a carbon tax in Oregon. Prices on carbon in these states would add to pre-existing ones in California and British […]

Cap and Trade in California: Cost Management

California’s cap-and-trade program for greenhouse gas emissions took effect in January 2013, and as the period of enforcement unfolds, both regulated entities and the California Air Resources Board (which is responsible for the implementation and management of the program) are considering how best to manage costs within the system. Several cost containment measures are outlined […]

Comparing the Clean Air Act and a Carbon Price

Though President Obama is set for a major address on climate tomorrow, US policy faces an uncertain future. EPA is moving haltingly ahead with regulations under the Clean Air Act (and may redouble its efforts after the speech), but some in Congress are pushing to revoke its authority. Others in Congress support new legislation setting […]