Dallas Burtraw: Robust Carbon Markets: Rethinking Quantities and Prices

Join Dallas Burtraw, Darius Gaskins Senior Fellow at Resources for the Future, for a discussion on carbon markets.

About the Lecture

Environmental policy with uncertainty is often posed as a choice between a price (tax) versus a quantity (cap and trade) instrument. In practice, the dominant approach across the globe is cap and trade, but the quantity targets (emissions caps) are typically over-achieved and the prices in these markets are typically lower than anticipated. One reason for low prices is the contribution to emissions reductions from companion policies that promote technologies such as renewable energy and energy efficiency. Paradoxically, the success of companion policies in reducing emissions has the unintended effect of undermining confidence in carbon markets by driving down prices in those markets, and the “waterbed” effect in the carbon market may erode the emissions reductions. This presentation evaluates a new approach that has been implemented in the Regional Greenhouse Gas Initiative called the emissions containment reserve. This mechanism automatically increases stringency when prices are lower than expected, improves cost-effectiveness, and reinforces the contribution of companion policies to achieving emissions goals.

About the Speaker

Dallas Burtraw has worked to promote efficient control of air pollution and written extensively on electricity industry regulation and environmental outcomes. Burtraw’s current research includes analysis of the distributional and regional consequences of climate policy, the evolution of electricity markets including renewable integration, and the interaction of climate policy with electricity markets. He has provided technical support in the design of carbon dioxide emissions trading programs in the Northeast states, California, and the European Union. He also has studied regulation of nitrogen oxides and sulfur dioxide under the Clean Air Act and conducted integrated assessment of costs, and modeled health and ecosystem effects and valuation, including ecosystem improvement in the Adirondack Park and the southern Appalachian region. Burtraw currently serves as Chair of California’s Independent Emissions Market Advisory Committee. Burtraw holds a Ph.D. in economics and a master’s degree in public policy from the University of Michigan and a bachelor’s degree from the University of California, Davis.