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Cap-And-Trade: A Cheaper Option Than Regulatory Policies?

Think Progress : “According to a new study, a price on carbon could be easier to attain economically than previously thought.”  

“The study , authored by two MIT researchers and published in Energy Journal, compared ‘traditional regulatory approaches’ to cut carbon, such as a country-wide clean energy standard and a fuel economy standard for new vehicles, with a cap-and-trade system that set a price on carbon. The researchers found that there were significant cost differences between approaches that aimed to limit emissions from one sector — such as electricity or transportation — and approaches that aimed to broadly cut emissions from all sectors. They looked at cost differences across different U.S. regions, sectors and income classes, and found that , if emissions-reducing regulations on the electricity sector and a fuel-economy standard were implemented, the two combined would cost more than a single cap and trade system.”  

Co-author Valerie Karplus: “With a broader policy, like cap-and-trade, the market can distribute the costs across sectors, technologies and time horizons, and find the cheapest solutions.”  

cap and trade Cap And Trade: A Cheaper Option Than Regulatory Policies?

Topics: wonk-wire