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A Mercurial Reaction on Mercury?
Criticism of the Bush administration's mercury proposal should not confuse the policy tool, emissions trading, with the environmental target.
Senior Fellows Dallas Burtraw and Alan Krupnick comment on the Bush's Administration's proposed changes to the Clean Air Act.
(December 2003)
Trading Cases:
Is trading credits in created markets a better way to reduce pollution and protect natural resources?
J. Boyd, D. Burtraw, A. Krupnick, V. McConnell, R. Newell, K. Palmer, J. Sanchirico, and M. Walls.
Environmental Science and Technology
June 2003
Confronting the Adverse Industry Impacts of Carbon Dioxide Abatement Policies: What Does it Cost?
Lawrence H. Goulder
Climate Issue Brief #23 September 2000
Using Emissions Trading to Regulate U.S. Greenhouse Gas Emissions: Additional Policy Design and Implementation Issues
Carolyn Fischer, Michael A. Toman, and Suzi Kerr
Climate Issue Brief #11
June 1998
Using Emissions Trading to Regulate U.S. Greenhouse Gas Emissions: Basic Policy Design and Implementation Issues
Carolyn Fischer, Michael A. Toman, and Suzi Kerr
Climate Issue Brief #10
June 1998
Tradable Carbon Permit Auctions: How and Why to Auction Not Grandfather
Peter Cramton
and Suzi Kerr
Discussion Paper 98-34
May 1998
Choosing Environmental Policy: Comparing Instruments and Outcomes in the United States and Europe
Winston Harrington, Richard Morgenstern, Thomas Sterner, eds. RFF Press, 2004
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Home  Policy Design |
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The government can create a market for pollution that provides emissions sources the flexibility to find the least-cost ways to abate their emissions to meet a particular target. First, an aggregate emissions cap is set for the economy. Second, this cap is divided into emissions permits and these permits are allocated to emitters. Third, sources that are required to hold permits to cover their emissions are allowed to freely buy and sell these permits. Finally, sources must submit permits on a regular basis (e.g., annually) to the government to cover their emissions.
In the climate change context, a number of important design questions merit attention. Should a program be "upstream" in the energy sector (e.g., as coal leaves the mine mouth, as crude oil enters the refinery gate, etc.), or "downstream" at emissions sources (e.g., power plants, automobiles, etc.)? The costs of monitoring and the feasible breadth of the program are influenced by such a decision. Should emissions permits be auctioned or given away based on historical emissions or related benchmarks? Should the program allow for "offsets" from unregulated sectors, biological carbon sequestration (carbon sinks), and other countries?
Resources for the Future has been a leader in the academic and policy world on the design of cap-and-trade programs. RFF scholars have played active roles in the design and analysis of the McCain-Lieberman domestic cap-and-trade program, the National Commission on Energy Policy's proposed cap-and-trade program, the Northeast's Regional Greenhouse Gas Initiative, and the European Union’s Emissions Trading System. This builds on RFF's extensive work that contributed to the design of, and evaluation of, the Acid Rain Program's sulfur dioxide trading system.
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Combating Global Warming
Is taxation or cap-and-trade the better strategy for reducing greenhouse emissions?
Ian W.H. Parry and William A. Pizer
Regulation Vol. 30, No. 3
Fall 2007
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Ray Kopp on E&E TV's OnPoint
Weathervane Feature | September 2007
Senior Fellow Ray Kopp shares insight into Congressional climate discussions and the prospects for economy-wide climate legislation. |
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Auction Design for Selling CO2 Emission Allowances Under the Regional Greenhouse Gas Initiative
Dallas Burtraw, Jacob Goeree, Charles Holt, Karen Palmer, and William Shobe
October 2007 |
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Allowance Allocation
Raymond J. Kopp
Weathervane Backgrounder | May 2007
This Backgrounder provides an overview of allocation concepts and issues under a cap-and-trade system. |
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Emission Trading versus CO2 Taxes
Ian W. H. Parry and William A. Pizer
Weathervane Backgrounder | May 2007
This Backgrounder compares and contrasts the two policy approaches and examines the extent to which the potential advantages of CO2 taxes might be captured in a hybrid emissions trading program through appropriate design features, such as safety valves and allowance auctioning. |
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The European Union Emissions Trading Scheme: A Brief Overview
Dallas Burtraw and Ray Kopp
RFF Senior Fellows Dallas Burtraw and Ray Kopp testified before Congressional committees on lessons U.S. policymakers can draw from the European Union's experience with its cap-and-trade program on carbon emissions. |
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The Stern Review and the Economic Analysis of Climate Change
An RFF Seminar
February 2007 |
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Decentralization in the EU Emissions Trading Scheme and Lessons for Global Policy
Joseph Kruger, Wallace E. Oates, and William A. Pizer
07-02 | February 2007 |
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The Evolution of a Global Climate Change Agreement William A. Pizer
07-03 | February 2007 |
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Summary of Climate Change Cap-and-Trade Proposals Introduced/ Filed/Elaborated in Staff Documents in the 109th Congress
William Pizer
Weathervane Backgrounder | February 2007
A tabular presentation of the elements of twelve legislative proposals for federal cap and trade programs designed to reduce greenhouse gas emissions circulated during the 109th Congress. |
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Output and Abatement Effects of Allocation Readjustment in Permit Trade
Thomas Sterner and Adrian Muller
06-49 | October 2006
This paper investigates the effects of different free allocation schemes on incentives and identify significant perverse effects on abatement and output employing a simple multi-period model. |
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Emissions Trading: Principles and Practice,
2nd Edition
Thomas H. Tietenberg
The second edition of one of the most widely cited works in the tradable permits literature, Emissions Trading offers a comprehensive overview of what we have learned about this important environmental policy instrument after twenty-five years of theory, practice, and research. |
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Design Elements for a Successful CO2 Trading Program in California
Presentation to the Environmental Law Conference of the State Bar of California
October 20, 2006
Dallas Burtraw |
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Design Elements for a Successful CO2 Trading Program
Presentation to California Air Resources Board (CARB)
October 20, 2006
Dallas Burtraw |
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Taking up the Slack: Lessons from a Cap-and-Trade Program in Chicago
David A. Evans and Joseph A. Kruger
Discussion Paper 06-36
July 2006 |
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Compensation Rules for Climate Policy in the Electricity Sector
Dallas Burtraw and Karen Palmer
National Bureau of Economic Research
July 27, 2006 |
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Climate Change Policy in the U.S. 2006
William A. Pizer
Bridges, Vol. 9
April 2006
Senior Fellow Billy Pizer examines in Bridges how the bipartisan Senatorial team of Pete Domenici and Jeff Bingaman might break new ground in U.S. climate change policy.  |
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Panel: The Choice of Instruments
Understanding Transatlantic Differences
An RFF Co-Hosted Seminar
Speakers address various methods for reducing greenhouse gas emissions, including priced-based market mechanisms and trading schemes and assess the pros and cons
of each. |
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The Kyoto Placebo
Ruth Greenspan Bell
Issues in Science and Technology
December 2005
RFF Resident Scholar Ruth Greenspan Bell argues that relying so heavily on the flexible mechanisms created by the Kyoto Protocol to control greenhouse gas emissions in the developing world is highly unrealistic. |
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Climate Policy Design Under Uncertainty
William A. Pizer
Discussion Paper 05-44 | October 2005
Fellow Billy Pizer argues that intensity-based targets and a price-based safety valve can lessen the downside of emissions caps. |
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The Ten-Year Rule: Allocation of Emission Allowances in the EU Emission Trading System
Markus Åhman, Dallas Burtraw, Joseph A. Kruger, and Lars Zetterberg
Discussion Paper 05-30
June 2005 |
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Allocation of CO2 Emissions Allowances in the Regional Greenhouse Gas Cap-and-Trade Program
Dallas Burtraw, Karen L. Palmer, and
Daniel B. Kahn
Discussion Paper 05-25
June 2005
RFF Researchers analyze the distributional and efficiency implications of different allowance allocation schemes in the RGGI region. |
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From SO2 to Greenhouse Gases: Trends and Events Shaping Future Emissions Trading Programs in the United States
Joseph A. Kruger
Discussion Paper 05-20 | June 2005 |
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Environmental and Technology Policies for Climate Change and Renewable Energy
Carolyn Fischer and Richard G. Newell
Discussion Paper 04-05, April 2004
Revised June 2005
Some of the most popular ways for supporting renewable energy are the least efficient at reducing carbon dioxide emissions. The most efficient way is also the least popular, setting out a dilemma for policymakers. |
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Companies and Regulators in Emissions Trading Programs
Joseph A. Kruger
Discussion Paper 05-03
February 2005 |
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Output-Based Allocations of Emissions Permits: Efficiency and Distributional Effects in a General Equilibrium Setting with Taxes and Trade
Carolyn Fischer and Alan Fox
Discussion Paper 04-37
December 2004 |
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Project-Based Mechanisms for Emissions Reductions: Balancing Trade-offs with Baselines
Carolyn Fischer
Discussion Paper 04-32 | August 2004 |
Can an Effective Global Climate Treaty Be Based on Sound Science, Rational Economics, and Pragmatic Politics?
Robert N. Stavins
Discussion Paper 04-28 | May 2004 |
Fiscal Interactions and the Case for Carbon Taxes over Grandfathered Carbon Permits
Ian W.H. Parry
Discussion Paper 03-46 | December 2003 |
Understanding the Design and Performance of Emissions Trading Systems for Greenhouse Gas Emissions: Proceedings of an Experts' Workshop to Identify Research Needs and Priorities
Michael A. Toman
Discussion Paper 03-33 | December 2003 |
Managing Permit Markets to Stabilize Prices
Richard G. Newell, William A. Pizer, and Jiangfeng Zhang
Discussion Paper 03--34 | June 2003 |
Are Emissions Permits Regressive?
Ian W.H. Parry
Discussion Paper 03-21 | June 2003 |
Combining Rate-Based and Cap-and-Trade Emissions Policies
Carolyn Fischer
Discussion Paper 03-32 | May 2003 |
The Paparazzi Take a Look at a Living Legend: The SO2 Cap-and-Trade Program for Power Plants in the United States
Dallas Burtraw and Karen L. Palmer
Discussion Paper 03-15
April 2003 |
Output-Based Allocation of Environmental Policy Revenues and Imperfect Competition
Carolyn Fischer
Discussion Paper 02-60 | January 2003 |
Are Tradable Emissions Permits a Good Idea?
Ian W.H. Parry
Issue Brief 02-33 | November 2002 |
The Ancillary Carbon Benefits of SO2 Reductions from a Small-Boiler Policy in Taiyuan, PRC
Richard D. Morgenstern, Alan J. Krupnick, and Xuehua Zhang
Discussion Paper 02-54 | September 2002 |
Adjusting Carbon Cost Analyses to Account for Prior Tax Distortions
Ian W.H. Parry
Discussion Paper 02-47 | August 2002 |
Multilateral Trade Agreements and Market-Based Environmental Policies
Carolyn Fischer, Sandra A. Hoffmann, and Yutaka Yoshino
Discussion Paper 02-28 | May 2002 |
The Effect on Asset Values of the Allocation of Carbon Dioxide Emission Allowances
Dallas Burtraw, Karen L. Palmer, Ranjit Bharvirkar, and Anthony Paul
Discussion Paper 02-15 | March 2002 |
International Emissions Trading Design and Tax Shifting by Multinational Corporations
Carolyn Fischer
Climate Issue Brief 02-01 | January 2002 |
Carbon Emission Trading Costs and Allowance Allocations: Evaluating the Options
Dallas Burtraw
Resources, Fall 2001 |
The Effect of Allowance Allocation on the Cost of Carbon Emission Trading
Dallas Burtraw, Karen L. Palmer, Ranjit Bharvirkar, and Anthony Paul
Discussion Paper 01-30 | August 2001 |
Rebating Environmental Policy Revenues: Output-Based Allocations and Tradable Performance Standards
Carolyn Fischer
Discussion Paper 01-22 | July 2001 |
Multinational Taxation and International Emissions Trading
Carolyn Fischer
Discussion Paper 01-18 | April 2001 |
Early Emissions Reduction Programs: An Application to CO2 Policy
Ian W.H. Parry and Michael A. Toman
Discussion Paper 00-26 | June 2000 |
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