Institute for Policy Integrity Comments to the California Air Resources Board on its Cap-And-Trade Program

Our previous comments in October 2017 and March 2018 suggested that ARB set the allowance price ceiling at least as high as the Interagency Working Group’s Social Cost of Carbon (SCC) estimates. We now recommend that the price floor should also account for the SCC. Setting both parameters appropriately is crucial to ensuring that the program sends effective price signals and accurately reflects the damage caused by carbon emissions. Our comments also address the ARB’s discussion of leakage, offset projects located outside the U.S., and how California can better allocate unsold carbon allowances.

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