Alan J. Krupnick in addition to Ian W.H. Parry of Resources for the Future convey a overnice brusk article on
"Decarbonizing the Power Sector: Are Feebates Better than a Clean Energy Standard?" But if the policy finish is to trim back carbon emissions, in that place are at to the lowest degree 4 policies inwards play--all discussed inwards their article.
- A build clean unloosen energy standard. They write: "Under this approach, electricity producers would last required to encounter a ascent fraction of their generation using zero-carbon sources or sources amongst lower carbon intensity (defined every bit CO2 emissions per kilowatt-hour [kWh]) than that of coal generation." In July, the Congressional Budget Office put out a written report on "The Effects of Renewable or Clean Electricity Standards:" :
- A "feebate" system, "which involves fees for [electricity] generators amongst above-average emissions intensity in addition to subsidies or rebates for those amongst below-average emissions intensity."
- A cap-and-trade system, inwards which the authorities sets an overall cap on carbon emissions, in addition to and so allocates permits to emit this sum of carbon. These emission permits would convey 2 of import traits: 1) they would shrink over time, so a permit to emit sum of carbon inwards 1 yr would gradually stage downwards to allow emitting alone a for certain percent of that sum inwards futurity years; in addition to 2) the permits could last bought in addition to sold, so that those who could trim back emissions relatively cheaply would convey an incentive to become ahead in addition to exercise so, in addition to to sell their excess permits to those who would honor it to a greater extent than expensive to trim back emissions.
- A carbon tax.
I won't elbow grease to rank these options inwards whatever systematic way, only hither are about of my thoughts nearly them.
1) Influenza A virus subtype H5N1 feebate organisation has about substantial advantages. Krupnick in addition to Parry explain: "The feebate approach has several potential advantages over a CES [clean unloosen energy standard]. For starters, the incremental costs of reducing CO2 are automatically equated across dissimilar generators, promoting a cost-effective allotment of emissions reductions inside the powerfulness sector at a given betoken inwards time. Another attraction of the feebate is that it automatically handles changes inwards the futurity costs of dissimilar generation technologies or fuel prices. If, for example, the futurity expansion of nuclear powerfulness is temporarily held up, firms would last permitted a higher emissions intensity (at the expense of paying to a greater extent than fees or receiving fewer rebates); nether a strict CES they would last required to encounter a given emissions intensity standard, regardless of costs. Conversely, if the competitiveness of air current powerfulness improves, firms are rewarded for exploiting this chance in addition to farther cutting their emissions nether a feebate system; amongst a CES, they convey no incentive to exercise ameliorate than the emissions intensity standard. By establishing a fixed cost on CO2 emissions, moreover, a feebate facilitates comparing of policy stringency across countries. This cost could last laid inwards trouble amongst estimates of the (global) environmental damages from CO2 (currently nearly $21 per ton, according to a recent review across USA agencies in addition to subsequent purpose inwards USA regulatory impact analyses [U.S. Interagency Working Group on Social Cost of Carbon 2010]) or prices prevailing inwards the European Union’s Emissions Trading."
2) Anti-tax stance is a political constraint. I suspect that the build clean unloosen energy touchstone is pop because, at to the lowest degree to politicians, it appears to convey no costs. Similarly, cap-and-trade may appear to impose no costs either. In contrast, a carbon revenue enhancement clearly looks similar a charge. Influenza A virus subtype H5N1 feebate proposal does take away collecting revenue in addition to passing it to other actors--but in that place is no actual revenue retained past times the government, so it may non await similar a revenue enhancement
3) The build clean unloosen energy touchstone in addition to feebate approaches both focus alone on electricity generation, in addition to for that argue would convey less outcome on carbon emissions than a broader-based cap in addition to merchandise or carbon revenue enhancement approach. This may too last a political selling point, because drivers using gasoline in addition to firms that are heavy users of coal or stone oil or natural gas would last less affected past times an approach that focused alone on electricity generation. However, the feebate thought mightiness convey broader applicability. I convey inwards the past times seen feebate proposals inwards the past times that focuses on automobile fuel efficiency: that is, those driving cars amongst below about degree of miles-per-gallon pay a fee, in addition to those driving cars inwards a higher house that degree of miles-per-gallon larn a rebate.
4) Influenza A virus subtype H5N1 build clean unloosen energy touchstone is a pure regulatory approach, specifying what is "clean" in addition to what is not, in addition to therefore is probable to last less effective than a cap-and-trade or a carbon revenue enhancement approach. Here's how the CBO makes this betoken inwards its report: "Even amongst a broad diversity of compliance options, neither an RES [renewable electricity standard] nor a CES [clean electricity standard] would last every bit cost-effective inwards cutting CO2 emissions every bit a “cap-and-trade” program. Such a plan would involve setting an overall cap on emissions in addition to letting large sellers of emission-creating products (such every bit electricity generators, stone oil producers in addition to importers, in addition to natural gas processors) merchandise rights to those express emissions. In that way, a cap-and-trade plan would create a straight incentive to cutting emissions; inwards contrast, an RES or CES would create a straight incentive to purpose to a greater extent than renewable or other types of build clean electricity only would convey alone an indirect outcome on emissions."
5) Influenza A virus subtype H5N1 carbon revenue enhancement in addition to auctioning of cap-and-trade permits would lift revenue that could last used to lower revenue enhancement rates inwards other areas, inwards ways that could heighten efficiency--but it is hard to guarantee that the revenues would last used inwards this way.
6) One swell payoff of a carbon revenue enhancement is that it reduces the incentives for political tinkering. Influenza A virus subtype H5N1 cap-and-trade proposal, for example, is probable to convey extensive grandfathering of those who currently emit carbon, in all probability along amongst a parade of exceptional rules in addition to exemptions. Defining what is "clean energy" or fifty-fifty how the feebates would last structured are probable to last to a greater extent than highly political decisions.