In August 2015, the Environmental Protection Agency released its final Clean Power Plan to regulate carbon dioxide emissions from existing power plants. States are now working to decide whether to opt for a rate-based or mass-based implementation plan. For states that use mass-based trading, the decision of how to allocate emission allowances is a key political choice. While the allocation approach that a state selects will not affect the environmental outcome of the policy, it can have a significant impact on who bears the cost of the program.
The Bipartisan Policy Center introduced some of the key issues related to allocation. Through moderated discussion, panelists explored options for distributing allowances, lessons learned from past policy experience, the implications of electricity market structure, and the expected impacts on companies and customers. Panelists weighed the benefits of a simple allocation approach versus a more complex design, including how allocation might attempt to address leakage of emissions to non-covered sources and the potential for disproportionate impacts on communities, companies, and/or industries.
Darius Gaskins Senior Fellow, Resources for the Future
Director, The NorthBridge Group
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Environmental and Energy Policy Director, Duke Energy
Director, Environmental Affairs, Dynegy
Senior Advisor, BPC