Ellerman A. Denny
- Published in print:
- 2006
- Published Online:
- January 2007
- ISBN:
- 9780195189650
- eISBN:
- 9780199783694
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780195189650.003.0003
- Subject:
- Economics and Finance, Development, Growth, and Environmental
This essay explains why cap-and-trade programs (in which government establishes an overall cap on pollution but allows firms to trade allocations beneath the cap) can be both more economically ...
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This essay explains why cap-and-trade programs (in which government establishes an overall cap on pollution but allows firms to trade allocations beneath the cap) can be both more economically efficient and more environmentally effective than prescriptive regulation. It underscores the importance of measuring effectiveness in ex post evaluations, which are defined as achieving the proximate goal (i.e., of emissions reduction), rather than the larger goal of solving the underlying problem (i.e., unhealthy air). The argument in favor of market instruments is supported with data from three emissions trading programs: the SO2 trading regime in Title IV of the Clean Air Act, the NOx budget program created by the EPA to address interstate ozone migration, and the RECLAIM program created by the South Coast Air Quality Management District in Southern California. It is proposed that market instruments represent a new pragmatism in environmental regulation and that they are part of the maturation of the regulatory process.Less
This essay explains why cap-and-trade programs (in which government establishes an overall cap on pollution but allows firms to trade allocations beneath the cap) can be both more economically efficient and more environmentally effective than prescriptive regulation. It underscores the importance of measuring effectiveness in ex post evaluations, which are defined as achieving the proximate goal (i.e., of emissions reduction), rather than the larger goal of solving the underlying problem (i.e., unhealthy air). The argument in favor of market instruments is supported with data from three emissions trading programs: the SO2 trading regime in Title IV of the Clean Air Act, the NOx budget program created by the EPA to address interstate ozone migration, and the RECLAIM program created by the South Coast Air Quality Management District in Southern California. It is proposed that market instruments represent a new pragmatism in environmental regulation and that they are part of the maturation of the regulatory process.
Leigh Raymond
- Published in print:
- 2016
- Published Online:
- May 2017
- ISBN:
- 9780262034746
- eISBN:
- 9780262336161
- Item type:
- chapter
- Publisher:
- The MIT Press
- DOI:
- 10.7551/mitpress/9780262034746.003.0003
- Subject:
- Political Science, Environmental Politics
This chapter describes the “old” model of cap-and-trade policy design that largely controlled emissions trading policy from its origins in the 1970s through the 1990s, under which emissions trading ...
More
This chapter describes the “old” model of cap-and-trade policy design that largely controlled emissions trading policy from its origins in the 1970s through the 1990s, under which emissions trading programs were adopted reluctantly, and “grandfathered” emissions allowances to current emitters at no cost. It also describes some important events starting in the 1990s that helped lay the groundwork for the sudden switch to auctions in RGGI, including: greater attention to allocation rules by political actors, new precedents such as spectrum rights auctions and severance taxes on some nature resources, new political and economic pressures from electricity deregulation, and the emergence of “public benefit” charges and programs to improve energy efficiency for consumers. In addition, this period saw the emergence of new polluter pays and public ownership normative frames in the context of emissions allowances. At the same time, the chapter documents how these initial changes were insufficient to successfully promote allowance auctions in the development of two prominent cap and trade programs: the initial phase of the EU ETS from 1998-2005, and the NOx Budget emissions trading program from 1994-2005.Less
This chapter describes the “old” model of cap-and-trade policy design that largely controlled emissions trading policy from its origins in the 1970s through the 1990s, under which emissions trading programs were adopted reluctantly, and “grandfathered” emissions allowances to current emitters at no cost. It also describes some important events starting in the 1990s that helped lay the groundwork for the sudden switch to auctions in RGGI, including: greater attention to allocation rules by political actors, new precedents such as spectrum rights auctions and severance taxes on some nature resources, new political and economic pressures from electricity deregulation, and the emergence of “public benefit” charges and programs to improve energy efficiency for consumers. In addition, this period saw the emergence of new polluter pays and public ownership normative frames in the context of emissions allowances. At the same time, the chapter documents how these initial changes were insufficient to successfully promote allowance auctions in the development of two prominent cap and trade programs: the initial phase of the EU ETS from 1998-2005, and the NOx Budget emissions trading program from 1994-2005.