A comparison of cost-containment instruments for US carbon reduction policies

A cap-and-trade program, as is used in the European Trading Scheme, is currently the most widely discussed method in the US for reducing greenhouse gases. A basic cap-and-trade program operates by mandating a fixed level of emissions for a given period, issuing permits, and then allowing a market for those permits to develop. The resulting market price for emissions permits, and hence the economic impacts of the chosen policy, can only be estimated in advance with a high degree of uncertainty. Many of the current US cap-and-trade proposals contain provisions for cost-containment instruments which reduce the possible range of emissions prices. This paper analyzes the relative effectiveness of three such cost-containment instruments, including a safety valve, an intensity target, and banking and borrowing. The results presented rely on two computable general equilibrium models developed at the Massachusetts Institute of Technology, and show the predicted performance of these instruments under a simulated range of economic outcomes.

Department dc:contributor.department

Massachusetts Institute of Technology. Technology and Policy Program.

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2008

Author dc:creator

• Jakobovits, Lisa M. (Lisa Michelle)

Advisor dc:contributor.advisor

• Mort D. Webster and A. Denny Ellerman.

• Technology and Policy Program.
• Engineering Systems Division.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/43183

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/43183