Common Tragedies

Thoughts on Environmental Economics

Workshop on managing the costs of climate policy, March 19

Posted by Daniel Hall on March 4, 2008

This event on “cost containment” within climate policy should be superb. It’s here at Resources for the Future on the morning of Wednesday, March 19 (full details at the website). I’ll be there, and hopefully can provide some post-event thoughts.

Managing Costs in a U.S. GHG Trading Program: Issues, Options and Implementation

One of the most controversial issues in the debate over the design of a U.S. greenhouse gas (GHG) trading program is how such a program will address concerns about potential costs and adverse impacts on the economy. A variety of proposals have emerged, including an explicit upper limit on allowances prices (in S.1766, the Low Carbon Economy Act) and an independent board to manage the emissions budget over time, in order to contain costs (in S.2191, the Climate Security Act).

This workshop will feature two expert panels to explore implications, advantages, and disadvantages associated with different approaches to managing costs. The first panel (8:30- 10:30a.m.) will focus on general mechanisms, like a safety valve, a quantity-limited safety valve, borrowing, and others. The second panel (10:45a.m.- 12:30p.m.) will focus on the potential role of an independent board, both to provide oversight and to intervene in the market with discretion, rather than via explicitly legislated rules. Half of the scheduled time will be reserved for questions from the audience.

Please RSVP by March 12 to April Stanley at or (202) 328-5074.

2 Responses to “Workshop on managing the costs of climate policy, March 19”

  1. It is hard to make good rules in advance all of the time, especially rules that adapt well to changes in the environment. Nonetheless, the idea of having an independent board “to intervene in the market with discretion” strike me as injecting an unknown amount of hard to measure, hard to mitigate political risk into the whole system.

    Sounds like an interesting program, I hope I am able to make it.

  2. Daniel Hall said

    Mike, great point. I think that this tension you highlight between “rules” and “discretion” is a really interesting feature of the debate about cost containment. The idea of a “Climate Fed” as proposed by L-W sounds pretty innovative, and potentially very useful. On the other hand, people forget how spectacularly unsuccessful (and sometimes counterproductive) our existing (monetary) Fed was for the first ~50 years of its existence.

    I’m hopeful that this event will have a nice rounded debate about the merits of various approaches.

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