This paper analyzes hybrid emissions trading systems (ETS) under partitioned environmental regulation when firms’ abatement costs and future emissions are uncertain. We show that hybrid policies that introduce bounds on the price or the quantity of abatement provide a way to hedge against...

The EU Emissions Trading Scheme continues to exempt industries deemed at risk of carbon leakage from permit auctions. Carbon leakage risk is established based on the carbon intensity and trade exposure of each 4-digit industry. Using a novel measure of carbon leakage risk obtained in interviews...

Subglobal climate policies will be the norm for some years to come. However, several options exist for improving the efficiency of domestic emissions regulation. A prominent but contentious policy option for improving the external efficiency is the implementation of carbon tariffs on...

We propose a blueprint for an international emission permit market such as the EU trading scheme. Each country decides on the amount of permits it wants to offer. A fraction of these permits is freely allocated, the remainder is auctioned. Revenues from the auction are collected in a global fund...

The introduction of a price on carbon dioxide will have important effects on the U.S. economy, and especially important effects on the electricity sector, which currently accounts for about 40 percent of carbon dioxide emissions. This paper examines alternative approaches to the distribution of...

This paper examines the key design mechanisms of existing and proposed cap-and-trade markets. First, it is shown that the hybrid systems under investigation (safety-valve with offsets, price floor using a subsidy, price collar, allowance reserve, and options offered by the regulator) can be...

There has been intense focus on the issue of how emissions allowances might be allocated under a potential federal cap-and-trade program. What fraction of the allowances should be auctioned out, as opposed to given out free? How much free allocation would be sufficient to preserve profits in...

This paper considers whether the California Air Resources Board, in implementing regulations to achieve the greenhouse gas reduction goals of the AB32 legislation, should include motor vehicle fuels as part of a cap-and-trade program. Its conclusion is that it is of importance to do so. While...

Over the last half decade, a variety of federal legislative proposals for limiting greenhouse gas (GHG) emissions have been put forward, most of which would set a price on carbon. As of early 2013, the one politically plausible policy appears to be a carbon tax, passed as part of a larger fiscal...

The aim of this paper is to find out whether shareholders consider the EU Emission Trading Scheme (EU ETS) as value relevant for polluting firms. An analysis is conducted of changes in share prices, caused by the first publication of annual compliance data. In April 2006, it turned out that...