Featured Research

from universities, journals, and other organizations

Cap And Trade Policies Limiting Carbon Dioxide Can Increase Value Of Some Electricity Generating Firms

Date:
December 17, 2008
Source:
Wiley-Blackwell
Summary:
A new study explores ways to target the compensation provided by the free allocation of emission allowances under a carbon dioxide cap and trade policy.

A new study in the Journal of Policy Analysis and Management explores ways to target the compensation provided by the free allocation of emission allowances under a CO2 cap and trade policy in order to avoid overcompensation of firms that already are benefiting from the program.

Related Articles


In most prior cap and trade programs, emission allowances have been given away for free to pollution emitting firms as a way to compensate them for the costs imposed by the policy. In the case of a CO2 cap and trade program affecting the electricity sector, some firms actually profit from the policy and others lose. Consumers as a group will lose in the sense that they will see increases in electricity prices.

A cap and trade policy that limits emissions of CO2 can increase the value of some electricity generating firms. Free distribution of just 6 percent of the total allowances would be sufficient to compensate shareholders for the loss in market value on an industry-wide basis.

However, granting free allowances to compensate firms for their losses under a cap and trade policy can be costly. It is difficult to compensate losers without also compensating undeserving parties. The researchers find that compensating firms for the last $2.6 billion in losses at the federal level imposes a cost of roughly $25 billion.

“Climate policy promises to be more costly than all prior air pollution policies. The use of a cap and trade approach will help to keep the costs low, but it will impose costs on various sectors of the economy,” the authors note. “Information about how to deliver compensation in a cost-effective manner could help to increase the political acceptability of climate policy and help preserve a larger share of allowance value that might be used in ways that lower the costs of compliance with the program and, thereby lower the economic impact of the policy.”

Dallas Burtraw, Ph.D., and Karen Palmer, Ph.D., both of Resources for the Future, utilized a detailed simulation model of the electricity sector to quantify the effects of different allocation approaches on asset values for electricity generators.


Story Source:

The above story is based on materials provided by Wiley-Blackwell. Note: Materials may be edited for content and length.


Journal Reference:

  1. Dallas Burtraw, Karen Palmer. Compensation rules for climate policy in the electricity sector. Journal of Policy Analysis and Management, 2008; 27 (4): 819 DOI: 10.1002/pam.20378

Cite This Page:

Wiley-Blackwell. "Cap And Trade Policies Limiting Carbon Dioxide Can Increase Value Of Some Electricity Generating Firms." ScienceDaily. ScienceDaily, 17 December 2008. <www.sciencedaily.com/releases/2008/12/081217123821.htm>.
Wiley-Blackwell. (2008, December 17). Cap And Trade Policies Limiting Carbon Dioxide Can Increase Value Of Some Electricity Generating Firms. ScienceDaily. Retrieved November 25, 2014 from www.sciencedaily.com/releases/2008/12/081217123821.htm
Wiley-Blackwell. "Cap And Trade Policies Limiting Carbon Dioxide Can Increase Value Of Some Electricity Generating Firms." ScienceDaily. www.sciencedaily.com/releases/2008/12/081217123821.htm (accessed November 25, 2014).

Share This


More From ScienceDaily



More Earth & Climate News

Tuesday, November 25, 2014

Featured Research

from universities, journals, and other organizations


Featured Videos

from AP, Reuters, AFP, and other news services

Antarctic Sea Ice Mystery Thickens... Literally

Antarctic Sea Ice Mystery Thickens... Literally

Newsy (Nov. 25, 2014) — Antarctic sea ice isn't only expanding, it's thicker than previously thought, and scientists aren't sure exactly why. Video provided by Newsy
Powered by NewsLook.com
3D Map of Antarctic Sea Ice to Shed Light on Climate Change

3D Map of Antarctic Sea Ice to Shed Light on Climate Change

Reuters - Innovations Video Online (Nov. 24, 2014) — A multinational group of scientists have released the first ever detailed, high-resolution 3-D maps of Antarctic sea ice. Using an underwater robot equipped with sonar, the researchers mapped the underside of a massive area of sea ice to gauge the impact of climate change. Ben Gruber reports. Video provided by Reuters
Powered by NewsLook.com
Car Park Solution for Flexible Green Energy

Car Park Solution for Flexible Green Energy

Reuters - Innovations Video Online (Nov. 24, 2014) — A British solar power start-up says that by covering millions of existing car park spaces around the UK with flexible solar panels, the country's power problems could be solved. Suzannah Butcher reports. Video provided by Reuters
Powered by NewsLook.com
Yellow-Spotted Turtles Rescued from Trafficking

Yellow-Spotted Turtles Rescued from Trafficking

Reuters - Light News Video Online (Nov. 24, 2014) — Hundreds of Amazon River turtles released into the wild in Peru. Sharon Reich reports. Video provided by Reuters
Powered by NewsLook.com

Search ScienceDaily

Number of stories in archives: 140,361

Find with keyword(s):
 
Enter a keyword or phrase to search ScienceDaily for related topics and research stories.

Save/Print:
Share:  

Breaking News:

Strange & Offbeat Stories

 

Plants & Animals

Earth & Climate

Fossils & Ruins

In Other News

... from NewsDaily.com

Science News

Health News

Environment News

Technology News



Save/Print:
Share:  

Free Subscriptions


Get the latest science news with ScienceDaily's free email newsletters, updated daily and weekly. Or view hourly updated newsfeeds in your RSS reader:

Get Social & Mobile


Keep up to date with the latest news from ScienceDaily via social networks and mobile apps:

Have Feedback?


Tell us what you think of ScienceDaily -- we welcome both positive and negative comments. Have any problems using the site? Questions?
Mobile iPhone Android Web
Follow Facebook Twitter Google+
Subscribe RSS Feeds Email Newsletters
Latest Headlines Health & Medicine Mind & Brain Space & Time Matter & Energy Computers & Math Plants & Animals Earth & Climate Fossils & Ruins