Fusing Electricity and Carbon Markets in the American West: Can Organized Electricity Markets Bolster Cap-and- Trade?

Caulkins, Luther

Efforts to “link” together several state or provincial GHG cap-and- trade programs to form a regional cap-and-trade initiative in western North America began in the early 2000s but never realized their aims. Now, emerging organized electricity markets in western states, includ- ing the Energy Imbalance Market, offer the possibility of integrating these markets with a regional cap-and-trade program to cut emissions at a low cost. This Note explains how a regional cap-and-trade program could be incorporated into the West’s nascent organized electricity mar- kets. It then argues that doing so could cost-effectively reduce power sector emissions, guide clean energy development, and alleviate incon- sistencies between varying state climate regulations. However, because of a phenomenon called “resource shuffling,” these benefits would not materialize unless all or most western states participate in the cap-and- trade program. To realize the climate benefits of integrating organized markets with cap-and-trade, climate-concerned advocates and policy- makers should therefore continue to aspire to a national cap-and-trade program or a regional program that attracts broad participation.


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Also Published In

Columbia Journal of Environmental Law
Columbia University Libraries

More About This Work

Published Here
December 7, 2022


electricity, carbon markets, cap and trade, regional cap and trade programs, climate policy