Recognizing Gravity as a Strong Force in Atmosphere Emissions Markets
A survey of emissions markets and factors influencing prices and discussion of how market design can anticipate and remedy the strong tendency for low prices
Environmental economics has made it possible to estimate prices for air pollution externalities. However, these values are rarely observed in emissions trading markets. Moreover, market outcomes show prices persistently remain below expectations and frequently fall over time. Low allowance prices may appear virtuous, but often reflect poor market design that does not anticipate interaction with other policies, and may undermine confidence in market-based approaches to environmental policy. This paper surveys emissions markets and factors influencing prices, and concludes with a discussion of how market design can anticipate and remedy the strong tendency for low prices.
On the Issues — Nov 10, 2023
On the Issues: Renewable Energy Headwinds, Electric Grid Upgrades, and More
A biweekly newsletter connecting global current events, pressing climate and energy policy news, and economics research from RFF scholars. This week: Renewable Energy Headwinds, Electric Grid Upgrades, and More.
Common Resources — Nov 9, 2023
Adding an Emissions Cap to the Inflation Reduction Act Would Help Meet US Climate Goals
Implementing a federal cap-and-trade policy would complement the Inflation Reduction Act. Together, these two policies could reduce air pollution and retail electricity prices and ensure that the United States meets its national climate goals for 2030.
Resources Magazine — Oct 4, 2023
California’s Cap-and-Trade Program and Improvements in Local Air Quality
Although sometimes at odds, economic efficiency and environmental justice can coexist in effective, viable climate policy. Thoughtful policy design can help ensure that environmental benefits accrue in communities that need them the most.
Testimony and Public Comments — May 15, 2023
Comments to the Washington Department of Ecology on Connecting Washington’s Cap-and-Invest Program to Other Carbon Markets
To the Washington Department of Ecology on the potential for Washington State to link its carbon market with the shared market of California and Quebec.