An upstream alternative to personal carbon trading

Sorrell, Steven (2010) An upstream alternative to personal carbon trading. Climate Policy, 10 (4). pp. 481-486. ISSN 1469-3062

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Abstract

An upstream trading scheme is described that could operate alongside the EU Emissions Trading Scheme (EU ETS). In this proposed scheme, fossil fuel producers (or suppliers) surrender allowances for the carbon contained in their fuel sales. Since the administrative costs are relatively low, such a scheme could provide a simpler, cheaper and more practical alternative to personal carbon trading, while at the same time delivering comparable economic and environmental benefits. The incentive effect for downstream consumers would be similar to a carbon tax. However, instead of a fixed and visible tax rate, the carbon price would be variable and largely hidden within the price of fuel. Consideration is given to the distributional impacts of the scheme and the potential benefits of linking to the EU ETS - including improved liquidity, reduced price volatility and reduced scope for exercising market power. It is argued that an upstream scheme is likely to have greater political acceptability, while at the same time delivering comparable performance in terms of economic efficiency, environmental effectiveness and social equity.

Item Type: Article
Schools and Departments: School of Business, Management and Economics > SPRU - Science Policy Research Unit
Subjects: H Social Sciences > H Social Sciences (General)
Depositing User: Steven Sorrell
Date Deposited: 06 Feb 2012 18:42
Last Modified: 24 Sep 2012 09:12
URI: http://sro.sussex.ac.uk/id/eprint/17824
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