Exact(7)
With proper design, allowance allocations can be used effectively to address leakage and competitiveness.
"Transparent" is an adjective no one can honestly apply to the House bill with its complex trading system, allowance allocations, exemptions and other machinery.
But the upstream architecture would be more likely to meet Boxer's test: simple, transparent, no safety valves, off ramps, giveaways or complicated allowance allocations.
There are, however, some legitimate concerns about this approach of linking annual allowance allocations with production levels, as I wrote in my previous post, "The Wonderful Politics of Cap-and-Trade: A Closer Look at Waxman-Markey".
At an average allowance price of $10 to $20 dollars per ton of CO2 between 2012-2025, that would amount to clean energy investments of just $6-9 6-9 billion year, and just $490-980 million for clean energy R&D (see our full analysis of the allowance allocations in ACES for more).
Proponents of carbon taxes worry about the propensity of political processes under a cap-and-trade system to compensate sectors through free allowance allocations, but a carbon tax is sensitive to the same political pressures, and may be expected to succumb in ways that are ultimately more harmful: reducing environmental achievement and driving up costs.
Similar(52)
On the other hand, output-based allowance allocation is the second best method.
The performance of the Jiangsu SO2 emission trading market was examined under different allowance allocation methods and transaction costs.
However, the above findings are sensitive to various policy arrangements such as renewable energy development and carbon allowance allocation method.
The auction allowance allocation method was more efficient and had the lowest total emission control costs than the other three allocation methods examined.
There are two methods for allowance allocation in an emission market: free allocation or auction, each having its pros and cons.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com