RFF on the Issues

RFF on the Issues: Setting a Carbon Emissions Price Floor

May 20, 2016 | Shannon Wulf Tregar

This week, France set itself apart as a leader in European climate policy by setting a carbon price floor of around $33.95 per ton of emissions. This move, which could spur other countries to act on climate issues, might also help address the falling carbon prices in the EU Emissions Trading System.

In 2014, RFF’s Dallas Burtraw noted that a price floor, which would be implemented as a minimum accepted bid in an auction, is “generally considered an important feature of good auction design [for emissions allowances].” It would benefit both European allowance recipients as well as regulators, due to its “nondiscretionary and rule-based approach, which helps markets to better anticipate future changes.”

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