Managing Costs in a U.S. Greenhouse Gas Trading Program: A Workshop Summary

Cost containment has emerged as a major point of contention in the current congressional debate about designing a cap-and-trade program to limit future U.S. greenhouse gas (GHG) emissions. This paper reviews basic concepts and policy options for cost management, drawing on a March 2008 workshop sponsored by Resources for the Future (RFF), the National Commission on Energy Policy, and Duke University’s Nicholas Institute for Environmental Policy Solutions. The different sources and temporal dimensions of cost uncertainty are explored, along with possible mechanisms for addressing short- and long-term cost concerns, including banking and borrowing, emissions offsets, a price cap (or safety valve), quantity-limited allowance reserve, and the concept of an oversight entity for GHG allowance markets modeled on the Federal Reserve. Recognizing that the inherent trade-off between environmental certainty and cost certainty has no perfect solution, the paper nonetheless concludes that numerous options exist for striking a reasonable and politically viable balance between these two objectives. In the effort to forge consensus around a particular set of options, it will be important for policymakers to strive to fit the remedy to the problem they are trying to solve and to preserve the underlying integrity of the overall program in terms of its long-term ability to sustain meaningful market incentives for low-carbon technologies.cost containment, greenhouse gases, cap-and-trade, safety valve, allowance reserve, uncertainty, banking and borrowing, offsets, price volatility, carbon Fed

Sustainable energy for developing countries

Overall, at least 1.6 billion people—one-fourth of the world’s population—currently live without electricity and this number has hardly changed in absolute terms since 1970. And yet, the electricity required for people to read at night, pump a minimal amount of drinking water and listen to radio broadcasts would amount to less than 1 percent of overall global energy demand. Developing and emerging economies face thus a two-fold energy challenge in the 21st century: Meeting the needs of billions of people who still lack access to basic, modern energy services while simultaneously participating in a global transition to clean, low-carbon energy systems. And historic rates of progress toward increased efficiency, de-carbonization, greater fuel diversity and lower pollutant emissions need to be greatly accelerated in order to do so. To a significant extent, fortunately, the goal of reducing greenhouse gas emissions may be aligned with the pursuit of other energy-related objectives, such as developing indigenous renewable resources and reducing local forms of pollution. In the near term, however, there will be tensions. Sustainable energy policies are more likely to succeed if they also contribute toward other societal and economic development objectives. Governments should look across policies to maximize positive synergies where they exist and avoid creating cost-cutting incentives

Sustainable energy for developing countries

Overall, at least 1.6 billion people—one-fourth of the world’s population—currently live without electricity and this number has hardly changed in absolute terms since 1970. And yet, the electricity required for people to read at night, pump a minimal amount of drinking water and listen to radio broadcasts would amount to less than 1 percent of overall global energy demand. Developing and emerging economies face thus a two-fold energy challenge in the 21st century: Meeting the needs of billions of people who still lack access to basic, modern energy services while simultaneously participating in a global transition to clean, low-carbon energy systems. And historic rates of progress toward increased efficiency, de-carbonization, greater fuel diversity and lower pollutant emissions need to be greatly accelerated in order to do so. To a significant extent, fortunately, the goal of reducing greenhouse gas emissions may be aligned with the pursuit of other energy-related objectives, such as developing indigenous renewable resources and reducing local forms of pollution. In the near term, however, there will be tensions. Sustainable energy policies are more likely to succeed if they also contribute toward other societal and economic development objectives. Governments should look across policies to maximize positive synergies where they exist and avoid creating cost-cutting incentives

Sustainable energy for developing countries

Overall, at least 1.6 billion people—one-fourth of the world’s population—currently live without electricity and this number has hardly changed in absolute terms since 1970. And yet, the electricity required for people to read at night, pump a minimal amount of drinking water and listen to radio broadcasts would amount to less than 1 percent of overall global energy demand. Developing and emerging economies face thus a two-fold energy challenge in the 21st century: Meeting the needs of billions of people who still lack access to basic, modern energy services while simultaneously participating in a global transition to clean, low-carbon energy systems. And historic rates of progress toward increased efficiency, de-carbonization, greater fuel diversity and lower pollutant emissions need to be greatly accelerated in order to do so. To a significant extent, fortunately, the goal of reducing greenhouse gas emissions may be aligned with the pursuit of other energy-related objectives, such as developing indigenous renewable resources and reducing local forms of pollution. In the near term, however, there will be tensions. Sustainable energy policies are more likely to succeed if they also contribute toward other societal and economic development objectives. Governments should look across policies to maximize positive synergies where they exist and avoid creating cost-cutting incentives