Tradable rights to emit air pollution*

Burtraw, Dallas; Evans, David

doi:10.1111/j.1467-8489.2007.00428.x

Cited by 15 publications

(9 citation statements)

References 38 publications

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“… We assume nothing specific about the initial allocation of permits except that they are tradable and the market is in equilibrium when the reduction is imposed. This is consistent with various alternative initial allocation schemes; see Burtraw and Evans (), Betz et al . () and Pezzey et al .…”

supporting

confidence: 89%

The regional economic effects of a reduction in carbon emissions

Chen

Groenewold

Hagger

2013

Aus J Agri & Res Econ

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Concern about climate change has led to policy to reduce CO 2 emissions although it is likely that policy will have differential regional impacts. While regional impacts will be politically important, very little analysis of them has been carried out. This paper contributes to the analysis of this issue by building a small model involving two regions, incorporating the right to emit CO 2 as a factor of production with the level of permitted emissions set by the national government. We argue that there is likely to be pressure on governments to use other policies to offset the possible adverse regional economic consequences of the pollution-reduction policy; we also consider a range of such policies. Using numerical simulation, we find that a 10 per cent reduction has relatively small but regionally differentiated economic effects. Standard fiscal policies are generally ineffective or counterproductive while labour market policies are more useful in offsetting the adverse effects.

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supporting

confidence: 89%

The regional economic effects of a reduction in carbon emissions

Chen

Groenewold

Hagger

2013

Aus J Agri & Res Econ

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“…The allocation of emissions permits is regarded as the most critical design feature of a GHG cap‐and‐trade ETS due to its significance in determining both the efficiency and distributional outcomes of a scheme (Burtraw and Evans 2009). An important distinction between permits received through an auction and those received for free is that under perfectly competitive conditions the latter provide recipients with a subsidy if they are given on the condition that either the firms receiving them continue to produce output, or the allocation is not restricted to a closed class of firms (Kling and Zhao 2000; Pezzey 2003).…”

Section: The Methods Of Allocating Permitsmentioning

confidence: 99%

“…A key issue is whether the method of allocating permits is likely to have an impact on the external financing of a plant. While the difference in cash flows arising from auctioned and free permits may impact on a generator’s financing costs and in turn affect the decision to invest or retire plant (Koutstaal 1997; Åhman and Holmgren 2006; IEA 2007), it should not affect the availability of capital to a generator (Burtraw and Evans 2009).…”

Section: The Methods Of Allocating Permitsmentioning

confidence: 99%

Understanding the effect of an emissions trading scheme on electricity generator investment and retirement behaviour: the proposed Carbon Pollution Reduction Scheme

Lambie

2010

Aus J Agri & Res Econ

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The objective of a greenhouse gas (GHG) emissions trading scheme (ETS) is to reduce emissions by transitioning the economy away from the production and consumption of goods and services that are GHG intensive. A GHG ETS has been a public policy issue in Australia for over a decade. The latest policy initiative on an ETS is the proposed Carbon Pollution Reduction Scheme (CPRS). A substantial share of Australia's total GHG reduction under the CPRS is expected to come from the electricity generation sector. This paper surveys the literature on investment behaviour under an ETS. It specifically focuses on the relationship between the design of an ETS and a generator's decisions to invest in low emissions plant and retire high emissions plant. The proposed CPRS provides the context for presenting key findings along with the implications for the electricity generation sector's transition to lower emissions plant. The literature shows that design features such as the method of allocating permits, the stringency of the emissions cap along with permit price uncertainty, provisions for banking, borrowing and internationally trading permits, and the credibility of emissions caps and policy uncertainty may all significantly impact on the investment and retirement behaviour of generators.

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“…The pervasive economic role of fossil energy use coupled with limited alternatives and continued global economic growth means that GHG emissions will not be reduced in the same way that ozone-depleting substances were virtually eliminated in the 1980s and 1990s (Sunstein 2007). In scenarios with limited to moderate emissions reductions, total mitigation costs tend to be a small fraction of the allowance value (Burtraw & Evans 2009). This leads to different distributional consequences than more typical situations where mitigation is a significant share of total emissions.…”

Section: Normative Theory Of Policy Design For Carbon Marketsmentioning

confidence: 98%

Carbon Markets: Past, Present, and Future

2012

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Carbon markets are substantial and expanding. There are many lessons from experience over the past 9 years: fewer free allowances, careful moderation of low and high prices, and a recognition that trading systems require adjustments that have consequences for market participants and market confidence. Moreover, the emerging international architecture features separate emissions trading systems serving distinct jurisdictions. These programs are complemented by a variety of other types of policies alongside the carbon markets. This architecture sits in sharp contrast to the integrated global trading architecture envisioned 15 years ago by the designers of the Kyoto Protocol and raises a suite of new questions. In this new architecture, jurisdictions with emissions trading have to decide how, whether, and when to link with one another, and policy makers must confront how to measure both the comparability of efforts among markets and the comparability between markets and a variety of other policy approaches.

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Tradable rights to emit air pollution*

Cited by 15 publications

References 38 publications

The regional economic effects of a reduction in carbon emissions

The regional economic effects of a reduction in carbon emissions

Understanding the effect of an emissions trading scheme on electricity generator investment and retirement behaviour: the proposed Carbon Pollution Reduction Scheme

Carbon Markets: Past, Present, and Future

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