Designing a Cap-and-Trade System for the United States

Attention to U.S. climate legislation is increasing on Capitol Hill. In June of this year, the House passed the American Clean Energy and Security Act introduced by Reps. Henry Waxman (D-Calif.) and Edward Markey (D-Mass.), and the Senate is considering a similar proposal by Sens. John Kerry (D-Mass.) and Barbara Boxer (D-Calif.). With international climate negotiations scheduled in Copenhagen for December, many view U.S. action on this issue as critical to a successful outcome. As a result, the central debate is no longer about the need for action, but about the form our actions will take.

On November 4, the Brookings Institution hosted a discussion on a new series of papers on U.S. climate policy design. Each paper tackles a different design topic, but they all share a common set of goals: to acknowledge the complexity inherent in climate policy; to explain the fundamental challenges involved in addressing a particular set of design features; and to suggest a credible path forward, calling attention to tradeoffs where they exist. Panelists will focus on such issues as emissions reduction targets, cost containment measures, oversight of the carbon derivatives market, the allocation of emissions allowances and provisions to mitigate the impacts on trade-exposed industries.