Price Limits in a Tradable Performance Standard
The speaker:BanBan Wang, doctor of economics from School of economics, Huazhong University of Science and Technology
Time: 10:30 on December 6, 2018
To point：room 110
About the speaker: BanBan Wang, doctor of economics, the young lecturer of school of economics, huazhong university of science and technology, director of carbon market research office, center for climate change and energy economics, wuhan university. Dr. Wang banban, the keynote speaker, was sponsored by the China scholarship council from December 2017 to November 2018, and went to duke university in the United States for a public visiting study, mainly engaged in the research of environmental economy and energy economy. In this seminar, Mr. Wang will give a brief introduction of her scientific research and learning in the United States, and report and discuss her paper Price Limits in A Tradable Performance Standard in collaboration with professor William a. Pizer, an environmental economist at duke university. This paper mainly studies the theoretical basis and practical problems of introducing price management into a new market-oriented environmental policy -- tradable performance standard market.
The abstract of the paper is as follows:
Tradable performance standards are widely used regulatory policies. Examples include the US lead phasedown, fuel economy standards for automobiles, renewable portfolio standards, low carbon fuel standards (LCFS), and—most recently—China’s new national carbon market. At the same time, theory and experience with traditional cap-and-trade programs suggests an important role for price limits in the form of floors, ceilings, and reserves. In this paper we develop a simple analytical model to show that the welfare comparison between tradable performance standards and a price-based alternative is a variant of the traditional Weitzman prices-versus-quantities result. We use this formula to estimate the gains to using price mechanisms in the California LCFS and China’s carbon market.Given prices are frequently favored, we then discuss practical issues regarding how a hybrid mechanism—price limits in a tradable performance standard—could be put into place.