California will implement a cap-and-trade program to limit emissions of carbon dioxide covering industry and electricity sector emissions in 2013, expanding to cover transportation and natural gas in 2015. Although cap-and-trade would increase annual electricity costs for the average customer by $30 to nearly $100, the allowance value created under the program can offset all of these costs and even reduce electricity bills. California’s Air Resources Board has directed electricity regulators to ensure this allowance value is used for the benefit of electricity ratepayers. This paper surveys four options: (1) reducing electricity bills; (2) sending equivalent revenue directly to households in proportion to costs; or (3) as equal payments per customer account; and (4) making investments to improve the electricity system and help reduce emissions. Under special consideration is this question: Who will receive the allowance value associated with the electricity sector? We explore the implications of three specific proposals.
Darius Gaskins Senior Fellow
Sarah Jo Szambelan
Workshops & Seminars
New Research Questions on Electricity, Transportation, and Carbon Markets: What Stands in the Way Becomes the Way
Lessons on Climate Policy from California and Germany
Oregon Could Become Second in World to Implement Economy-Wide Carbon Pricing
This bill advances a model for states to develop carbon cap programs that can be customized to fit the local economy