Featured Research

from universities, journals, and other organizations

Energy study commissioned by California Air Resources Board recommends three reforms to protect cap-and-trade

Date:
July 7, 2014
Source:
University of California, Berkeley Haas School of Business
Summary:
California’s landmark cap-and-trade system for regulating greenhouse gases could be vulnerable to price spikes and market manipulation, according to a study. But the state’s air-quality regulators can prevent that outcome with three straightforward reforms, the study says.

California's landmark cap-and-trade system for regulating greenhouse gases could be vulnerable to price spikes and market manipulation, according to a study released today by scholars affiliated with the Energy Institute at Haas. But the state's air-quality regulators can prevent that outcome with three straightforward reforms, the study says.

Related Articles


Specifically, the California Air Resources Board should consider (1) strengthening the new market's price collar -- the so-called allowance price containment reserve -- (2) allowing permits to be converted from one compliance period to another and (3) providing more public information on emissions and emissions-allowance holdings.

"With a couple of straightforward adjustments, California's course for addressing climate change with a market mechanism would be a model for other states and countries," says Prof. Severin Borenstein, the study's principal investigator and research associate, Energy Institute at Haas, UC Berkeley's Haas School of Business.

In addition to Prof. Borenstein, the study's authors are Prof. James Bushnell at UC Davis, Prof. Frank A. Wolak at Stanford University and Matthew Zaragoza-Watkins, a doctoral candidate at UC Berkeley. Profs. Borenstein, Bushnell and Wolak are members of the Market Simulation Group that advised the Air Resources Board.

There is a small, but significant, risk that manipulation could occur if large emitting entities were to buy and hoard excess permits in hopes of inflating the price and then selling, the new report says.

To minimize risks price spikes and manipulation, the Air Resources Board must ensure that it has a large enough reserve of permits for release whenever the price hits the ceiling, the report says. It should also allow emitters to pay a fee to be able to transfer permits intended for use in later compliance periods to earlier ones.

These measures would add up to "an unambiguous policy that credibly limits the maximum allowance price," the report says. Such a policy "is important to market stability and a strong deterrent to attempts at market manipulation."

The Energy Institute at Haas, a part of UC Berkeley's Haas School of Business, unites research and curricular programs on energy business, policy, and technology commercialization. It aims to bridge the gap between the frontiers of economic and scientific energy research and the marketplace.

The abstract to the article is available at: http://ei.haas.berkeley.edu/abstract_wp251.html


Story Source:

The above story is based on materials provided by University of California, Berkeley Haas School of Business. Note: Materials may be edited for content and length.


Cite This Page:

University of California, Berkeley Haas School of Business. "Energy study commissioned by California Air Resources Board recommends three reforms to protect cap-and-trade." ScienceDaily. ScienceDaily, 7 July 2014. <www.sciencedaily.com/releases/2014/07/140707212541.htm>.
University of California, Berkeley Haas School of Business. (2014, July 7). Energy study commissioned by California Air Resources Board recommends three reforms to protect cap-and-trade. ScienceDaily. Retrieved November 23, 2014 from www.sciencedaily.com/releases/2014/07/140707212541.htm
University of California, Berkeley Haas School of Business. "Energy study commissioned by California Air Resources Board recommends three reforms to protect cap-and-trade." ScienceDaily. www.sciencedaily.com/releases/2014/07/140707212541.htm (accessed November 23, 2014).

Share This


More From ScienceDaily



More Earth & Climate News

Sunday, November 23, 2014

Featured Research

from universities, journals, and other organizations


Featured Videos

from AP, Reuters, AFP, and other news services

Anglerfish Rarely Seen In Its Habitat Will Haunt You

Anglerfish Rarely Seen In Its Habitat Will Haunt You

Newsy (Nov. 22, 2014) For the first time Monterey Bay Aquarium recorded a video of the elusive, creepy and rarely seen anglerfish. Video provided by Newsy
Powered by NewsLook.com
Raw: Buffalo Residents Digging Out, Helping out

Raw: Buffalo Residents Digging Out, Helping out

AP (Nov. 22, 2014) Hundreds of volunteers joined a 'shovel brigade' in Buffalo, New York on Saturday, as the city was living up to its nickname, "The City of Good Neighbors." Video provided by AP
Powered by NewsLook.com
Toyota's Hydrogen Fuel-Cell Green Car Soon Available in the US

Toyota's Hydrogen Fuel-Cell Green Car Soon Available in the US

AFP (Nov. 21, 2014) Toyota presented its hydrogen fuel-cell compact car called "Mirai" to US consumers at the Los Angeles auto show. The car should go on sale in 2015 for around $60.000. It combines stored hydrogen with oxygen to generate its own power. Duration: 01:18 Video provided by AFP
Powered by NewsLook.com
Google Announces Improvements To Balloon-Borne Wi-Fi Project

Google Announces Improvements To Balloon-Borne Wi-Fi Project

Newsy (Nov. 21, 2014) In a blog post, Google said its balloons have traveled 3 million kilometers since the start of Project Loon. Video provided by Newsy
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