Cap-and-trade programs under delayed compliance: Consequences of interim injections of permits

• 成果类型: Article
• 署名作者: Hasegawa, Makoto; Salant, Stephen
• 署名单位: National Graduate Institute for Policy Studies; University of Michigan System; University of Michigan
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2014.07.006
• 发表日期: 2014
• 页码: 24-34
• 关键词: emissions trading; marketable permits; Compliance timing; Price collar; Safety valve; Price ceiling; Speculative attacks

摘要

Virtually every analysis of cap-and-trade programs assumes that firms must surrender permits as they pollute. However, no program, existing or proposed, requires such continual compliance. Some (e.g. the Acid Rain Program limiting SO2 emissions) require compliance once a year; others (e.g. the Regional Greenhouse Gas Initiative limiting CO2 emissions) require compliance every three years. The paths of emissions and permit prices would be invariant to compliance timing (Holland-Moore, 2013) if the government never injected additional permits between successive compliance dates. However, virtually all emissions trading programs require such injections through either (1) interim permit auctions or (2) sales from cost containment reserves intended to cap permit prices. In such cases, analyses which abstract from delayed compliance may mislead policy makers. For example, a cost containment reserve judged sufficient to cap prices at a ceiling over a year may sell out in a single day. (C) 2014 Elsevier B.V. All rights reserved.