Conquering Cost: Evaluating Optimal Policy Approaches to the Cost of Climate Change

As the U.S. Senate continues work on a comprehensive legislative vehicle, concerns about “cost” remain central to the discussion. Cost as a term serves as an umbrella for a number of issues, such as the overall effect of climate policy on the nation’s gross domestic product and the effect of policy on the competitiveness of sensitive industries. To explore this issue more deeply, the Nicholas Institute for Environmental Policy Solutions is holding a half-day, invitation-only workshop on Monday, October 5, 2009.

The October workshop will present results from our work performed over August and September on three policy levers to combat cost raised at an inaugural ‘Conquering Cost’ workshop held in Washington DC on July 30, 2009. The three policy levers pertain to offsets; cost uncertainty and the allowance reserve; and mechanisms to compensate energy-intensive, trade-exposed (EITE) U.S. sectors while promoting clean technology development and export. July workshop participants—a microcosm of policy forces at play in the Senate—raised several key questions, which we hope to begin to answer in this workshop. Specifically:

• How can we reduce uncertainties in offset investment timing and eligibility? Capped sectors may need to draw on a large offset supply to contain compliance costs. Because federal offset protocols have yet to be developed uncertainties remain that may hamper investment in offset projects.

• How does the American Clean Energy and Security Act (ACES) define and determine allowances for EITE sectors? Because some of these sectors are likely to have difficult-to-define outputs and heterogeneous manufacturing processes and products, what data sources are necessary to define and accurately allocate to EITE sectors? How might the definitions and allocation systems be improved?

• In addition to ACES’ endeavors to make EITEs whole, how can a Senate proposal proactively promote greater low-carbon RD&D and create U.S. green jobs?

• Are the ACES provisions for a strategic allowance reserve adequate for protecting the market against unanticipated high prices and intermittent volatility?

In addition to answering these questions, this workshop will introduce Nicholas Institute work that explores how technology transfer and carbon market design may also contain costs associated with climate legislation. 

Presentations:

• Welcome and Introduction (Brian Murray, Nicholas Institute)
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• Reducing Offset Supply Uncertainties (Brian Murray, Nicholas Institute)
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• Allowance Reserve Design Issues (Brian Murray, Nicholas Institute)
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• Refining Provisions for Trade Exposed Firms (Jan Mazurek, Nicholas Institute)
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• Provisions to Promote Technology Transfer (Nicole St. Clair Knobloch)
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• Carbon Market Design and Cost Containment (Jonas Monast, Nicholas Institute)
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