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Price Floors for Emissions Trading

  • Peter Wood

    ()

    (Resource Management in Asia-Pacific Program, Crawford School of Public Policy, Australian National University)

  • Frank Jotzo

    ()

    (Research School of Pacific and Asian Studies,College of Asia and Pacific, Australian National University)

Price floors in greenhouse gas emissions trading schemes can have advantages for technological innovation, price volatility, and management of cost uncertainty, but implementation has pitfalls. We argue that the best mechanism for implementing a price floor is by way of firms paying an extra fee or tax. This has budgetary advantages and is more compatible with international permit trading than alternative approaches that dominate the academic and policy debate. The fee approach can also be used to implement more general hybrid approaches to emissions pricing.

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File URL: https://crawford.anu.edu.au/research_units/eerh/pdf/EERH_RR36.pdf
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Paper provided by Environmental Economics Research Hub, Crawford School of Public Policy, The Australian National University in its series Environmental Economics Research Hub Research Reports with number 0936.

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Date of creation: Oct 2009
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Handle: RePEc:een:eenhrr:0936
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