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Price Floors for Emissions Trading

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  • Wood, Peter John
  • Jotzo, Frank

Abstract

Price floors in greenhouse gas emissions trading schemes can have advantages for technological innovation, price volatility, and management of cost uncertainty. Implementing the schemes, however, has pitfalls. This research report argues that requiring firms to pay an extra fee or tax is the best way to put a price floor in place. As well as providing budgetary advantages, the fee approach is more compatible with international permit trading than the alternative approaches currently dominating academic and policy debate. The fee approach can also be used for other emissions pricing schemes.

Suggested Citation

  • Wood, Peter John & Jotzo, Frank, 2009. "Price Floors for Emissions Trading," Research Reports 94885, Australian National University, Environmental Economics Research Hub.
    • Handle: RePEc:ags:eerhrr:94885
    DOI: 10.22004/ag.econ.94885
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    References listed on IDEAS

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    Keywords

    Environmental Economics and Policy; Resource /Energy Economics and Policy;

    JEL classification:

    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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