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ERIC Number: EJ812575
Record Type: Journal
Publication Date: 2008
Pages: 29
Abstractor: As Provided
Reference Count: 40
ISBN: N/A
ISSN: ISSN-0276-8739
Compensation Rules for Climate Policy in the Electricity Sector
Burtraw, Dallas; Palmer, Karen
Journal of Policy Analysis and Management, v27 n4 p819-847 Fall 2008
Most previous cap and trade programs have distributed emission allowances for free to incumbent producers. However, in the electricity sector the value of CO[subscript 2] allowances may be far in excess of costs to industry and giving them away to firms diverts allowance value from other purposes. Using a detailed simulation model, this paper shows that compensation to firms losing asset value under a climate cap and trade policy can be achieved for a small fraction of total allowance value, if targeted carefully. However, the economic efficiency cost of providing incremental compensation to reach the fully compensated level is many multiples of that incremental compensation. These considerations might move policymakers away from free allocation of CO[subscript 2] emission allowances in the electricity sector. (Contains 7 tables, 5 figures, and 13 footnotes.)
John Wiley & Sons, Inc. Subscription Department, 111 River Street, Hoboken, NJ 07030-5774. Tel: 800-825-7550; Tel: 201-748-6645; Fax: 201-748-6021; e-mail: subinfo@wiley.com; Web site: http://www3.interscience.wiley.com/browse/?type=JOURNAL
Publication Type: Journal Articles; Reports - Research
Education Level: N/A
Audience: Policymakers
Language: English
Sponsor: N/A
Authoring Institution: N/A