Saturday, June 2, 2012

California’s New Gold: A Primer on the Use of Allowance Value Created under the CO2 Cap-and-Trade Program

Abstract: California will enact an economy wide cap-and-trade program on CO2. Estimates of the value of tradable emissions allowances in the first year range from roughly $2.6 to $7.8 billion, when electricity and industry are covered under the program. Those sectors receive most of their allowances for free; electricity sector allowance value is directed to the benefit of ratepayers. In the first year a fraction of allowances, mostly with future year vintage, will be sold through an auction with a value of roughly $0.6 to $1.8 billion. That revenue will be returned to the California economy through appropriation by the legislature. Allowance auction revenue will grow five-fold in 2015 when transportation and natural gas are included. To whom does this revenue belong? This is the key unresolved issue in the design of the California program.

by Dallas Burtraw, David W McLaughlin and Sarah Jo F Szambelan
Resources For the Future (RFF) www.RFF.org
RFF Discussion Paper 12-23; May, 2012

No comments:

Post a Comment