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32 Harv. Envtl. L. Rev. 293 (2008)
A Meaningful U.S. Cap-and-Trade System to Address Climate Change

handle is hein.journals/helr32 and id is 297 raw text is: A MEANINGFUL U.S. CAP-AND-TRADE SYSTEM TO ADDRESS CLIMATE CHANGE Robert N. Stavins* ABSTRACT There is growing impetus for a domestic climate policy that can provide mean- ingful reductions in emissions of CO2 and other greenhouse gases. In this article, I propose and analyze a scientifically sound, economically rational, and politically feasible approach for the United States to reduce its contributions to the increase in atmospheric concentrations of greenhouse gases. The proposal features an up- stream, economy-wide C02 cap-and-trade system that implements a gradual trajec- tory of emissions reductions over time and includes mechanisms to reduce cost uncertainty. I compare the proposed system with frequently discussed alternatives. In addition, I describe common objections to a cap-and-trade approach to the prob- lem and provide responses to those objections. TABLE OF CONTENTS L Introduction ............................................... If. Proposal for a Meaningfil Cap-and-Trade System ............ 11. Economic Assessment of the Proposal ....................... IV. Comparison of Cap-and-Trade with Alternative Proposals .... V. Common Objections and Responses ......................... VI. Summary and Conclusions .................................. Appendix: Applications of Cap-and-Trade Mechanisms ............. 1. INTRODUCTION It is increasingly clear that anthropogenic emissions of greenhouse gases (GHGs) are likely to change the earth's climate in ways that many people will regret. Two trace constituents of the atmosphere, carbon dioxide (C02) and water vapor, create a thermal blanket for the planet much the way glass on a greenhouse traps the sun's energy within. It is a good thing, too: without greenhouse warming, the planet would be far too cold to be * Albert Pratt Professor of Business and Government, John F. Kennedy School of Govern- ment, Harvard University; Director, Harvard Environmental Economics Program; University Fellow, Resources for the Future; and Research Associate, National Bureau of Economic Re- search. This article draws on a working paper the author prepared for The Hamilton Project at the Brookings Institution. A revised and condensed version was subsequently published as a Hamilton Project monograph. See ROBERT N. STAVINS, A U.S. CAP-AND-TRADE SYSTEM TO ADDRESS GLOBAL CLIMATE CHANGE (Hamilton Project Discussion Paper 2007-13) (2007), available at http://www.brookings.edu/-/media/Files/rc/papers/2007/lOclimatestavins/l0 climatestavins.pdf. Helpful research assistance was provided by Matthew Ranson, and valua- ble comments on a previous version were provided by Joseph Aldy, Jason Bordoff, Denny Ellerman, Douglas Elmendorf, Jeffrey Frankel, Jason Furman, Lawrence Goulder, Judson Jaffe, Nathaniel Keohane, Gilbert Metcalf, Sheila Olmstead, William Pizer, Robert Repetto, Eric Toder, and the editors of the Harvard Environmental Law Review, but the author is responsible for all remaining errors.

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