FEEM working papers "Note di lavoro" series
2008 .082

A Meaningful U.S. Cap-and-Trade System to Address Climate Change


Authors: Robert N. Stavins
Series: Climate Change and Sustainable Development
Editor: Carlo Carraro
Type: Journal
Keywords: Cap-and-Trade System,Carbon Dioxide,Greenhouse Gas Emissions,Global Climate Change,Carbon Taxes
JEL n.: Q540,Q280,Q380,Q480,Q580
JEL: Harvard Environmental Law Review
Pages: Vol. 32, pp. 293-371
Date: 2008

Abstract

There is growing impetus for a domestic U.S. climate policy that can provide meaningful reductions in emissions of CO2 and other greenhouse gases. In this article, I propose and analyze a scientifically sound, economically rational, and politically feasible approach for the United States to reduce its contributions to the increase in atmospheric concentrations of greenhouse gases. The proposal features an up-stream, economy-wide CO2 cap-and-trade system which implements a gradual trajectory of emissions reductions over time, and includes mechanisms to reduce cost uncertainty. I compare the proposed system with frequently discussed alternatives. In addition, I describe common objections to a cap-and-trade approach to the problem, and provide responses to these objections.

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