CIAO DATE: 01/2010
December 2009
Belfer Center for Science and International Affairs, Harvard University
Allowing for a price collar within a policy focused on long-run cumulative emissions targets is an effective and politically viable way to move international negotiations on climate policy forward. The economic uncertainty surrounding target commitments is enormous and combining a clear cumulative emissions target with a price collar optimally balances the environmental objective with the need to ensure that commitments remain feasible. Using plausible assumptions, the example in this paper illustrates how a price collar does this.
Resource link: Achieving Comparable Effort through Carbon Price Agreements [PDF] - 217K