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  • Why electricity markets will never be (totally) free

    Over the past few years, the U.S. electricity grid has begun a massive, underappreciated, and largely unintentional transition away from coal to natural gas. Because nobody decided on a shift to gas, or directed such a shift, many people have mistaken the transition for the outcome of a “free market.” It’s an easy mistake to […]

  • Will the real conservatives please stand up?

    Conservatives used to take environmental issues seriously. Despite the usual linking of environmental policy with the Left, in fact it was conservative Republican presidents who initiated some of the most ground-breaking environmental achievements: Richard Nixon established the Environmental Protection Agency in 1970; Ronald Reagan signed the Montreal Protocol to combat ozone depletion in 1987 (for […]

  • Electricity markets are weird: why a carbon price isn't enough

    If power companies have to pay for their CO2 emissions, what will happen to the price of electricity? The answer isn't as obvious as you think.

  • Approaching Copenhagen with a Portfolio of Domestic Commitments

    As we approach the beginning of the Fifteenth Conference of the Parties of the United Nations Framework Convention on Climate Change (UNFCCC) in Copenhagen in December, international negotiations are focused on developing a climate policy framework for the post-2012 period, when the Kyoto Protocol’s first commitment period will have ended.  In addition to negotiations under […]

  • Can perfect markets induce capital investment?

    Question: are there any examples of a completely free market inducing investment in mature, capital-intensive industries? I’m not sure there are. More problematically, I’m not sure that economists and policy makers appreciate this reality. The result is that we continue to create markets — from electricity to CO2 — that by design are incapable of […]

  • The wonderful politics of cap-and-trade: A closer look at Waxman-Markey

    The headline of this post is not meant to be ironic. Despite all the hand-wringing in the press and the blogosphere about a political “give-away” of allowances for the cap-and-trade system in the Waxman-Markey bill voted out of committee last week, the politics of cap-and-trade systems are truly quite wonderful, which is why these systems […]

  • What explains the recent popularity of market-based environmental solutions?

    Despite the potential cost-effectiveness of market-based policy instruments like pollution taxes and tradable permits, conventional approaches — including design and uniform performance standards — have been the mainstay of U.S. environmental policy since before the first Earth Day in 1970. Gradually, however, the political process has become more receptive to innovative, market-based strategies. In the […]