Regional carbon dioxide permit trading in the United States: coalition choices for Pennsylvania

Rose, Adam and Peterson, Thomas D. and Zhang, ZhongXiang (2006): Regional carbon dioxide permit trading in the United States: coalition choices for Pennsylvania.

Abstract

An overview is given of the growing number of regional associations in which states have entered into voluntary arrangements to limit greenhouse gas (GHG) emissions. In particular, in the Regional Greenhouse Gas Initiative (RGGI), a number of northeastern states have joined to create a regional GHG cap and trade program, beginning with the utility industry. Analysis is made of the five key issues relating to these current and potential climate action associations: the extent of the total and individual state mitigation cost-savings across all sectors from potential emission permit trading coalitions; the size of permit markets associated with the various coalitions; the relative advantages of joining various coalitions for swing states such as Pennsylvania; the implications of the exercise of market power in the permit market; and the total and individual state/country cost-savings from extending the coalition beyond US borders. It is shown that overall efficiency gains from trading with a system of flexible state caps, with greater overall cost savings increasing with increasing geographic scope.

• Item Type: MPRA Paper
• Language: English
• Keywords: Regional Greenhouse Gas Initiative; Cap and trade program; Market power in the permit market; Mitigation costs; The size of permit market; Coalition choices for Pennsylvania
• Subjects: R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R1 - General Regional Economics > R13 - General Equilibrium and Welfare Economic Analysis of Regional Economies; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q52 - Pollution Control Adoption and Costs ; Distributional Effects ; Employment Effects; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q4 - Energy > Q48 - Government Policy; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q54 - Climate ; Natural Disasters and Their Management ; Global Warming; D - Microeconomics > D4 - Market Structure, Pricing, and Design > D42 - Monopoly; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q58 - Government Policy

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