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Tradable Rights to Emit Air Pollution

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  • Burtraw, Dallas

    ()
    (Resources for the Future)

  • Evans, David A.

Abstract

The use of cap-and-trade to regulate air pollution promises to achieve environmental goals at lower cost than traditional prescriptive approaches. Cap-and-trade has been applied to various air pollutants including sulfur dioxide, nitrogen oxides, and volatile organic compounds in the United States and carbon dioxide in the European Union. This corresponds to what is likely to become the most expensive environmental undertaking in history—the effort to reduce the heating of the planet. However, the efficacy of a cap-and-trade policy for carbon dioxide depends in large part on the design of the program. In addition to the level of the cap, the most important decision facing policymakers will be the initial allocation of emissions allowances. The method used to allocate tradable emissions allowances will have significant influence on the distributional impact and efficiency of the program.

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Bibliographic Info

Paper provided by Resources For the Future in its series Discussion Papers with number dp-08-08.

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Date of creation: 17 Mar 2008
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Handle: RePEc:rff:dpaper:dp-08-08

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Related research

Keywords: cap-and-trade; emission allowances; allocation; auction; grandfathering; climate change; global warming; carbon dioxide;

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References

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Cited by:
  1. Richard G. Newell & William A. Pizer & Daniel Raimi, 2012. "Carbon Markets: Past, Present, and Future," NBER Working Papers 18504, National Bureau of Economic Research, Inc.
  2. Lambie, Neil Ross, 2010. "Understanding the effect of an emissions trading scheme on electricity generator investment and retirement behaviour: the proposed Carbon Pollution Reduction Scheme," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 54(2), June.

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