environment policy

Transparency in a Cap and Trade Regime

One of the common arguments for a cap and trade system for GHG is that it establishes a price for carbon which will drive changes in investment and behavior. However, the current draft of the proposed Waxman-Markey bill (W-M) has introduced a wide range of allowances, offsets, and other mechanisms which may alter the actual price of carbon on a case-by-case basis. So even though there may be a market price for allowances that are traded among large emitters, that price will usually have nothing to do with the price for carbon that is actually paid by an energy consumer.