Treatment of early emission reductions by leading climate bills in the U.S. Congress

Abstract

Since climate change first emerged on the public agenda, many U.S. companies have made investments to reduce their greenhouse gas footprints. Opportunities also exist for deeper cuts in the near future. Consciously or not, the architects of future cap and trade legislation will build policy structures that reward or penalize these early emission reductions. This master’s project takes an in-depth look at the early action policies of three leading congressional proposals. It clarifies the trade-offs among policy alternatives and recommends an optimal policy on the basis of distributional equity, political support, economic and environmental impacts, and administrative feasibility. Policy recommendations also draw on lessons learned from the European Union’s greenhouse gas trading market and previous U.S. pollutant trading programs.