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Climate Policy's Uncertain Outcomes for Households: The Role of Complex Allocation Schemes in Cap-and-Trade

  • Joshua Blonz , Dallas Burtraw and Margaret A Walls
Published/Copyright: November 4, 2010
The B.E. Journal of Economic Analysis & Policy
From the journal The B.E. Journal of Economic Analysis & Policy Volume 10 Issue 2

Abstract

The design and implementation of the allocation of CO2 emissions allowances in recent bills in the U.S. Congress introduces a new source of uncertainty to the climate policy debate. We examine the Waxman-Markey bill (H.R. 2454) with scenarios that vary outcomes associated with allocations to electricity local distribution companies, investments in energy efficiency and technology development. The average net household burden in 2016 ranges from $133, with a CO2 allowance price of $13.19, to $418, with an allowance price of $23.41. The uncertainty about average burdens does not carry over to the distribution of those burdens; both scenarios impose the greatest burden as a percentage of income on middle-income households. A third scenario that allocates a substantial portion of allowance value as lump-sum payments imposes an average net household burden of $206, with a price of $17.37 and with highly progressive distributional impacts.

Keywords: cap-and-trade; allocation; distributional effects; cost; burden; regulated entities
Published Online: 2010-11-4

©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston

Articles in the same Issue

  1. Symposium
  2. Distributional Implications of Alternative U.S. Greenhouse Gas Control Measures
  3. Comment on 'Distributional Implications of Alternative U.S. Greenhouse Gas Control Measures'
  4. Equity, Heterogeneity and International Environmental Agreements
  5. Comment on "Equity, Heterogeneity and International Environmental Agreements"
  6. Climate Policy's Uncertain Outcomes for Households: The Role of Complex Allocation Schemes in Cap-and-Trade
  7. Comment on "Climate Policy's Uncertain Outcomes for Households: The Role of Complex Allocation Schemes in Cap-and-Trade"
  8. The Social Evaluation of Intergenerational Policies and Its Application to Integrated Assessment Models of Climate Change
  9. Comment on "The Social Evaluation of Intergenerational Policies and Its Application to Integrated Assessment Models of Climate Change"
  10. What are the Costs of Meeting Distributional Objectives for Climate Policy?
  11. Comment on "What are the Costs of Meeting Distributional Objectives for Climate Policy?"
  12. CIM-EARTH: Framework and Case Study
  13. Comment on "CIM-EARTH: Framework and Case Study"
  14. The Global Effects of Subglobal Climate Policies
  15. Comment on "The Global Effects of Subglobal Climate Policies"
  16. Analytical General Equilibrium Effects of Energy Policy on Output and Factor Prices
  17. Comment on "Analytical General Equilibrium Effects of Energy Policy on Output and Factor Prices"
  18. The Distributional Impact of Climate Policy
  19. Comment on "The Distributional Impact of Climate Policy"
  20. On the Economics of Climate Policy
  21. Comment on "On the Economics of Climate Policy": Is Climate Change Mitigation the Ultimate Arbitrage Opportunity?
https://doi.org/10.2202/1935-1682.2533
Keywords for this article
cap-and-trade; allocation; distributional effects; cost; burden; regulated entities

Articles in the same Issue

  1. Symposium
  2. Distributional Implications of Alternative U.S. Greenhouse Gas Control Measures
  3. Comment on 'Distributional Implications of Alternative U.S. Greenhouse Gas Control Measures'
  4. Equity, Heterogeneity and International Environmental Agreements
  5. Comment on "Equity, Heterogeneity and International Environmental Agreements"
  6. Climate Policy's Uncertain Outcomes for Households: The Role of Complex Allocation Schemes in Cap-and-Trade
  7. Comment on "Climate Policy's Uncertain Outcomes for Households: The Role of Complex Allocation Schemes in Cap-and-Trade"
  8. The Social Evaluation of Intergenerational Policies and Its Application to Integrated Assessment Models of Climate Change
  9. Comment on "The Social Evaluation of Intergenerational Policies and Its Application to Integrated Assessment Models of Climate Change"
  10. What are the Costs of Meeting Distributional Objectives for Climate Policy?
  11. Comment on "What are the Costs of Meeting Distributional Objectives for Climate Policy?"
  12. CIM-EARTH: Framework and Case Study
  13. Comment on "CIM-EARTH: Framework and Case Study"
  14. The Global Effects of Subglobal Climate Policies
  15. Comment on "The Global Effects of Subglobal Climate Policies"
  16. Analytical General Equilibrium Effects of Energy Policy on Output and Factor Prices
  17. Comment on "Analytical General Equilibrium Effects of Energy Policy on Output and Factor Prices"
  18. The Distributional Impact of Climate Policy
  19. Comment on "The Distributional Impact of Climate Policy"
  20. On the Economics of Climate Policy
  21. Comment on "On the Economics of Climate Policy": Is Climate Change Mitigation the Ultimate Arbitrage Opportunity?
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