IDEAS home Printed from https://ideas.repec.org/p/rff/dpaper/dp-13-04.html
   My bibliography  Save this paper

Linking by Degrees: Incremental Alignment of Cap-and-Trade Markets

Author

Listed:
  • Burtraw, Dallas

    () (Resources for the Future)

  • Palmer, Karen

    () (Resources for the Future)

  • Munnings, Clayton

    () (Resources for the Future)

  • Weber, Paige
  • Woerman, Matt

    () (Resources for the Future)

Abstract

National and subnational economies have started implementing carbon pricing systems unilaterally, from the bottom up. Therefore, the potential linking of individual cap-and-trade programs to capture efficiency gains and other benefits is of keen interest. This paper introduces a two-tiered framework to guide policymakers, with an interest in North American policy outcomes. One tier discusses program elements that need to be aligned before trading of allowances across programs can occur. The second identifies benefits of incremental alignment of program elements even prior to trading between programs—which we call “linking by degrees.” We apply this framework to California’s cap-and-trade program and the Regional Greenhouse Gas Initiative. These programs are already linking through cooperation and sharing of information. Many aspects of the program designs are ready for the exchange of allowances within a common market; however, the difference in allowance prices remains an issue to be considered before formal linking could occur.

Suggested Citation

  • Burtraw, Dallas & Palmer, Karen & Munnings, Clayton & Weber, Paige & Woerman, Matt, 2013. "Linking by Degrees: Incremental Alignment of Cap-and-Trade Markets," Discussion Papers dp-13-04, Resources For the Future.
  • Handle: RePEc:rff:dpaper:dp-13-04
    as

    Download full text from publisher

    File URL: http://www.rff.org/RFF/documents/RFF-DP-13-04.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Sheila M. Olmstead & Robert N. Stavins, 2012. "Three Key Elements of a Post-2012 International Climate Policy Architecture," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, pages 65-85.
    2. Helm, Carsten, 2003. "International emissions trading with endogenous allowance choices," Journal of Public Economics, Elsevier, vol. 87(12), pages 2737-2747, December.
    3. Gilbert E. Metcalf & David Weisbach, 2012. "Linking Policies When Tastes Differ: Global Climate Policy in a Heterogeneous World," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 6(1), pages 110-129.
    4. Charles A. Holt & William Shobe & Dallas Burtraw & Karen Palmer & Jacob K. Goeree, 2007. "Auction Design for Selling CO2 Emission Allowances Under the Regional Greenhouse Gas Initiative," Reports 2007-03, Center for Economic and Policy Studies.
    5. repec:oup:renvpo:v:6:y::i:1:p:110-129 is not listed on IDEAS
    6. Flachsland, Christian & Marschinski, Robert & Edenhofer, Ottmar, 2009. "Global trading versus linking: Architectures for international emissions trading," Energy Policy, Elsevier, vol. 37(5), pages 1637-1647, May.
    7. repec:oup:renvpo:v:6:y::i:1:p:65-85 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bodansky, Daniel M. & Hoedl, Seth A. & Metcalf, Gilbert E. & Stavins, Robert N., 2014. "Facilitating Linkage of Heterogeneous Regional, National, and Sub-National Climate Policies through a Future International Agreement," Working Paper Series rwp14-056, Harvard University, John F. Kennedy School of Government.
    2. Munnings, Clayton & Morgenstern, Richard D. & Wang, Zhongmin & Liu, Xu, 2016. "Assessing the design of three carbon trading pilot programs in China," Energy Policy, Elsevier, vol. 96(C), pages 688-699.
    3. Matthew Ranson & Robert N. Stavins, 2016. "Linkage of greenhouse gas emissions trading systems: learning from experience," Climate Policy, Taylor & Francis Journals, pages 284-300.
    4. Peter Zaman & Adam Hedley, 2016. "Networked Carbon Markets," World Bank Other Operational Studies 26430, The World Bank.
    5. Soren T. Anderson & Ryan Kellogg & Stephen W. Salant, 2014. "Hotelling Under Pressure," NBER Working Papers 20280, National Bureau of Economic Research, Inc.
    6. Solveig Delabroye, 2014. "The Eco-Industry and Trade Agreements," CIRANO Working Papers 2014s-45, CIRANO.
    7. repec:ucp:jaerec:doi:10.1086/691975 is not listed on IDEAS
    8. Baran Doda & Luca Taschini, 2017. "Carbon Dating: When Is It Beneficial to Link ETSs?," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, pages 701-730.
    9. Simon Quemin & Christian de Perthuis, 2017. "Transitional restricted linkage between Emissions Trading Schemes," Working Papers 1701, Chaire Economie du climat.

    More about this item

    Keywords

    greenhouse gas; climate change; climate policy; policy coordination;

    JEL classification:

    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rff:dpaper:dp-13-04. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Webmaster). General contact details of provider: http://edirc.repec.org/data/degraus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.