Terminating links between emission trading programs
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© 2015 Elsevier Inc.Links between emission trading programs are not immutable, as highlighted by New Jersey's exit from the Regional Greenhouse Gas Initiative in 2011. This raises the question of what to do with existing permits that are banked for future use-choices that have consequences for market behavior in advance of, or upon speculation about, delinking. We consider two delinking policies. One differentiates banked permits by origin, the other treats banked permits the same. We describe the price behavior and relative cost-effectiveness of each policy. Treating permits differently generally leads to higher costs, and may lead to price divergence, even with only speculation about delinking.
Published Version (Please cite this version)10.1016/j.jeem.2015.03.003
Publication InfoPizer, WA; & Yates, AJ (2015). Terminating links between emission trading programs. Journal of Environmental Economics and Management, 71. pp. 142-159. 10.1016/j.jeem.2015.03.003. Retrieved from https://hdl.handle.net/10161/10258.
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Professor in the Sanford School of Public Policy
Billy Pizer joined the faculty of the Sanford School of Public Policy at Duke University in the fall of 2011. He also was appointed a faculty fellow in the Nicholas Institute for Environmental Policy Solutions, a nonpartisan institute at Duke that focuses on finding solutions to some of the nation's most pressing environmental challenges. His current research examines how we value the future benefits of climate change mitigation, how environmental regulation and climate policy can af