Tradeable carbon permit auctions How and why to auction not grandfather

摘要

An auction of carbon permits is the best way to achieve domestic carbon caps designed to limit global climate change. To minimize administrative costs, permits would be required at the level of oil refineries, natural gas pipe lines, natural gas liquid sellers, and coal processing plants. To maximize liquidity in secondary markets, permits would e fully tradable and bankable. The government would conduct quarterly auctions. A standard ascending-clock auction in which price is gradually raised until there is no excess demand would provide reliable price discovery.