Comments on the Joint California-Quebec Workshop: Potential Amendments to the Cap-and-Trade Regulation
RFF researchers submitted two comments to the California Air Resources Board in response to a cap-and-trade workshop held with the government of Quebec.
In a joint workshop with the government of Quebec on November 16, 2023, the California Air Resources Board (CARB) invited stakeholders to comment on how cost containment features can reflect real-time valuation of allowance prices and be designed to enhance price stability.
Resources for the Future (RFF) Darius Gaskins Senior Fellow Dallas Burtraw and University of Virginia Professor William Shobe authored the following comment, which offers four findings:
- The authors identify the advantages of the existing price-responsive features in the California program, including the advantages of the Allowance Price Containment Reserve.
- The authors suggest that CARB should consider the addition of one (or more) additional price steps. They specifically describe the addition of an Emissions Containment Reserve.
- They suggest a reform to the auction design that would improve its performance while implementing an Emissions Containment Reserve.
- They suggest that CARB should consider reforming the way that allowances sold from the Allowance Price Containment Reserve enter the market. They describe how those allowances could enter the market through their integration into the primary quarterly auction.
Burtraw wrote an additional comment with RFF Senior Research Analyst Nick Roy and RFF Research Associate Maya Domeshek. This comment considers three scenarios for characterizing allowance demand and presents results of modeling conducted with RFF's Haiku emissions market model.
Authors
William Shobe
University of Virginia
