Innovation under cap-and-trade programs.

ABSTRACT: Policies incentivizing the private sector to reach its innovative potential in "clean" technologies are likely to play a key role in achieving climate stabilization. This article explores the relationship between innovation and cap-and-trade programs (CTPs)--the world's most prominent climate policy instrument--through empirical evidence drawn from successful CTPs for sulfur dioxide and nitrogen oxide control. The article shows that before trading began for these CTPs, analysts overestimated the value of allowances in a pattern suggestive of the frequent a priori overestimation of the compliance costs of regulation. When lower-than-expected allowance prices were observed, in part because of the unexpected range of abatement approaches used in the lead-up to trading, emissions sources chose

SUBMITTER: Taylor MR 

PROVIDER: S-EPMC3323980 | biostudies-literature | 2012 Mar

REPOSITORIES: biostudies-literature