Assessment of U.S. Cap-and-Trade Proposals
Abstract in HTML and technical report in PDF available on the Massachusetts Institute of Technology Joint Program on the Science and Policy of Global Change website (http://mit.edu/globalchange/www/).
| Main Authors: | , , , , , , |
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| Format: | Technical Report |
| Language: | en_US |
| Published: |
MIT Joint Program on the Science and Policy of Global Change
2007
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| Online Access: | http://mit.edu/globalchange/www/abstracts.html#a146 http://hdl.handle.net/1721.1/38460 |
| _version_ | 1811084345836830720 |
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| author | Paltsev, Sergey Reilly, John M. Jacoby, Henry D. Gurgel, Angelo C. Metcalf, Gilbert E. Sokolov, Andrei P. Holak, Jennifer F. |
| author_facet | Paltsev, Sergey Reilly, John M. Jacoby, Henry D. Gurgel, Angelo C. Metcalf, Gilbert E. Sokolov, Andrei P. Holak, Jennifer F. |
| author_sort | Paltsev, Sergey |
| collection | MIT |
| description | Abstract in HTML and technical report in PDF available on the Massachusetts Institute of Technology Joint Program on the Science and Policy of Global Change website (http://mit.edu/globalchange/www/). |
| first_indexed | 2024-09-23T12:49:16Z |
| format | Technical Report |
| id | mit-1721.1/38460 |
| institution | Massachusetts Institute of Technology |
| language | en_US |
| last_indexed | 2024-09-23T12:49:16Z |
| publishDate | 2007 |
| publisher | MIT Joint Program on the Science and Policy of Global Change |
| record_format | dspace |
| spelling | mit-1721.1/384602019-04-12T08:38:34Z Assessment of U.S. Cap-and-Trade Proposals Paltsev, Sergey Reilly, John M. Jacoby, Henry D. Gurgel, Angelo C. Metcalf, Gilbert E. Sokolov, Andrei P. Holak, Jennifer F. Abstract in HTML and technical report in PDF available on the Massachusetts Institute of Technology Joint Program on the Science and Policy of Global Change website (http://mit.edu/globalchange/www/). The MIT Emissions Prediction and Policy Analysis model is applied to an assessment of a set of cap-and-trade proposals being considered by the U.S. Congress in spring 2007. The bills specify emissions reductions to be achieved through 2050 for the standard six-gas basket of greenhouse gases. They fall into two groups: one specifies emissions reductions of 50% to 80% below 1990 levels by 2050; the other establishes a tightening target for emissions intensity and stipulates a time-path for a “safety valve” limit on the emission price that approximately stabilizes U.S. emissions at the 2008 level. A set of three synthetic emissions paths are defined that span the range of stringency of these proposals, and these “core” cases are analyzed for their consequences in terms of emissions prices, effects on energy markets, welfare cost, the potential revenue generation if allowances are auctioned and the gains if permit revenue were used to reduce capital or labor taxes. Initial period prices for the first group of proposals, in carbon dioxide equivalents, are estimated between $30 and $50 per ton CO2-e depending on where each falls in the 50% to 80% range, with these prices rising by a factor of four by 2050. Welfare costs are less than 0.5% at the start, rising in the most stringent case to near 2% in 2050. If allowances were auctioned these proposals could produce revenue between $100 billion and $500 billion per year depending on the case. Emissions prices for the second group, which result from the specified safety-valve path, rise from $7 to $40 over the study period, with welfare effects rising from near zero to approximately a 0.5% loss in 2050. Revenue in these proposals depends on how many allowances are freely distributed. To analyze these proposals assumptions must be made about mitigation effort abroad, and simulations are provided to illuminate terms-of-trade effects that influence the emissions prices and welfare effects, and even the environmental effectiveness, of U.S. actions. Sensitivity tests also are provided of several of the design features imposed in the “core” scenarios including the role of banking, the specification of less than complete coverage of economic sectors, and the development of international permit trading. Also, the effects of alternative assumptions about nuclear power development are explored. Of particular importance in these simulations is the role of biofuels, and analysis is provided of the implications of these proposals for land use and agriculture. Finally, the U.S. proposals, and the assumptions about effort elsewhere, are extended to 2100 to allow exploration of the potential role of these bills in the longer-term challenge of reducing climate change risk. Simulations using the MIT Integrated System Model show that the 50% to 80% targets are consistent with global goals of atmospheric stabilization at 450 to 550 ppmv CO2 but only if other nations, including the developing countries, follow. Development of the underlying analysis models and other research-based tools used in this study was supported separately by the U.S. Department of Energy, Office of Biological and Environmental Research [BER] (DE-FG02-94ER61937), the U.S. Environmental Protection Agency (XA-83042801-0), the Electric Power Research Institute, and by a consortium of industry and foundation sponsors. 2007-08-15T18:43:24Z 2007-08-15T18:43:24Z 2007-04 Technical Report http://mit.edu/globalchange/www/abstracts.html#a146 http://hdl.handle.net/1721.1/38460 Report no. 146 en_US Report no. 146 application/pdf MIT Joint Program on the Science and Policy of Global Change |
| spellingShingle | Paltsev, Sergey Reilly, John M. Jacoby, Henry D. Gurgel, Angelo C. Metcalf, Gilbert E. Sokolov, Andrei P. Holak, Jennifer F. Assessment of U.S. Cap-and-Trade Proposals |
| title | Assessment of U.S. Cap-and-Trade Proposals |
| title_full | Assessment of U.S. Cap-and-Trade Proposals |
| title_fullStr | Assessment of U.S. Cap-and-Trade Proposals |
| title_full_unstemmed | Assessment of U.S. Cap-and-Trade Proposals |
| title_short | Assessment of U.S. Cap-and-Trade Proposals |
| title_sort | assessment of u s cap and trade proposals |
| url | http://mit.edu/globalchange/www/abstracts.html#a146 http://hdl.handle.net/1721.1/38460 |
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