HOW TO PROTECT CAP-AND-TRADE
Three Reforms to Protect California's Cap-and-Trade Policy
July 8, 2014 (Energy Institute at Haas/U.C. Berkeley)
"California’s landmark cap-and-trade system for regulating greenhouse gases could be vulnerable to price spikes and market manipulation, according to [Report of the Market Simulation Group…]…But the state’s air-quality regulators can prevent that outcome with three straightforward reforms…(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…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…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…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…” click here for more
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