Cap-and-Trade and Innovation

“Virtually all economists agree that one of the biggest selling points for pricing greenhouse gases (GHGs) – whether a carbon tax or cap-and-trade — is that it will boost innovation in low-carbon technologies.

But will innovation return the favor in California’s cap-and-trade market by making it function more smoothly, saving it from the potential Achilles’ heel of extremely low or high prices?

As a result, a cap-and-trade market for GHGs, driven by unpredictable BAU emissions, will likely end up at an administratively-determined price floor or price ceiling, with the associated emissions substantially below the cap or above it.”

Click here to read more from The Energy Collective.

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