A Cheap and Effective CO2 Cap-and-Trade for Electricity

Now that debate has shifted from regional toward federal cap-and-trade policy, it's time to reintroduce the idea of using reduction credits rather than allowances to drive emission reductions. A credit system appears to work well to reduce CO2 emissions with minimal compliance cost – and without windfall, wealth transfer, or market power concerns. It also provides a strong incentive for renewable energy and energy efficiency, and a ready means to harmonize a federal cap-and-trade with state and federal renewable energy portfolio requirements.