Knowledge Tree
cap-and-trade
Also known as: cap-and-trade program, cap-and-trade policy, cap and trade, cap-and-trade legislation, cap-and-trade, emission trading, cap-and-trade scheme
Facts (33)
Sources
Designing Carbon Pricing Policies Across the Globe link.springer.com 28 facts
claimExperts who reply to the initial survey invitation do not provide different recommendations on average regarding carbon taxes, cap-and-trade, Border Carbon Adjustments (BCA), or revenue uses compared to those who reply after a reminder.
measurementIn the 2020 European IGM Economic Experts Panel, 53% of members agreed that carbon taxes are a better way to implement climate policy than cap-and-trade, 35% were uncertain, and 11% expressed disagreement.
measurementRecommendations for a carbon tax versus cap-and-trade are less frequent when reweighted for global average GDP per capita compared to the average in the study's original sample.
claimExperts who do not reveal their identity provide similar recommendations regarding carbon taxes, cap-and-trade, Border Carbon Adjustments (BCA), and revenue use categories compared to experts who do reveal their identity.
measurementIn the 2018 US IGM Economic Experts Panel, 66% of members agreed that carbon taxes are a better way to implement climate policy than cap-and-trade, 29% were uncertain, and 0% expressed disagreement.
measurementAmong surveyed experts, 4% provided no clear recommendation regarding instrument choice, while 18% recommended an 'other instrument or mix of instruments', which typically included combinations of carbon taxes and cap-and-trade.
measurementA survey of more than 400 academic experts on carbon pricing across the globe found that nearly twice as many experts favor a carbon tax over a cap-and-trade scheme for unilateral carbon pricing.
referenceLarry Karp and Christian Traeger (2024) revisited the debate on climate policy instruments and found that the persistence of greenhouse gases and the presence of technological innovations tend to favor cap-and-trade schemes over carbon taxes.
measurementThe existence of a carbon tax in an expert's country is associated with a lower propensity to recommend cap-and-trade (18% vs. 33%) and a higher propensity to recommend carbon taxes (61% vs. 45%).
claimThe authors of the study 'Designing Carbon Pricing Policies Across the Globe' found that among six climate policy instruments, direct regulation received the highest rating from experts, while cap-and-trade schemes received the lowest.
claimIn a survey of 467 experts, nearly twice as many respondents favored a carbon tax over a cap-and-trade scheme for unilateral carbon pricing.
measurementIn the survey of experts, 49% recommended using a carbon tax, 23% recommended cap-and-trade with a price collar, and 6% recommended cap-and-trade without a price collar.
procedureThe authors of 'Designing Carbon Pricing Policies Across the Globe' reweight recommendations on carbon taxes, cap-and-trade, Border Carbon Adjustments (BCA), and revenue use options by the characteristics of both respondents and non-respondents to test for non-response bias.
procedureThe authors rebalance expert recommendations using propensity score matching based on specific characteristics: geographic location (Europe, Oceania, Asia, or Africa & South America), gender, publication and citation counts, whether publications are in economics journals, and expert views on carbon taxes or cap-and-trade.
measurementExperts from countries with a cap-and-trade scheme are less likely to recommend Border Carbon Adjustment (BCA), showing a negative association with a p-value of 0.033.
claimThe authors of 'Designing Carbon Pricing Policies Across the Globe' suggest that cross-country heterogeneity in recommendations for carbon taxes versus cap-and-trade schemes may indicate that policy-makers lack clear-cut guidance, potentially stalling progress on carbon pricing.
claimExperts surveyed in the study clearly prefer carbon taxes over cap-and-trade schemes on aggregate (two-sided t-test: p < 0.000).
measurementSupport for cap-and-trade as a climate policy instrument decreases as the recommended stringency of global emission reduction targets increases (univariate logistic regression, 1% significance level).
measurementThe relationship between CO2 emissions per capita and experts' recommendation of cap-and-trade is positive and significant at the 5% level in the multivariate analysis, whereas it is statistically insignificant in the univariate analysis.
claimEconomists show particularly strong support for carbon taxation, whereas views regarding cap-and-trade schemes show more variation across different academic disciplines.
claimEconomists and climate policy experts have not reached a consensus on whether a carbon tax or a cap-and-trade scheme is the preferable instrument for regulating greenhouse gas emissions.
procedureThe authors of 'Designing Carbon Pricing Policies Across the Globe' identified potential experts on carbon pricing by running an automated keyword search in SCOPUS for authors of at least two publications since 2000 that have been cited at least once, using terms such as 'carbon tax' and 'cap-and-trade,' and filtering for those with a workable email address.
claimPolitical economy considerations, such as those discussed by Hepburn (2006) and Stavins (2022), may influence the choice between carbon taxes, cap-and-trade schemes, or hybrid approaches.
claimThe survey conducted in 'Designing Carbon Pricing Policies Across the Globe' deliberately excluded sub-level implementation questions, such as whether a carbon price is applied to households or industrial firms, to maintain a succinct comparison between carbon tax and cap-and-trade schemes.
claimExperts who recommend a carbon tax tend to recommend using revenues for general government spending more often than experts who recommend cap-and-trade, though the difference is statistically insignificant.
claimSupport for carbon taxes over cap-and-trade is significantly higher in countries with a high GDP per capita.
measurementIn the multivariate analysis, existing carbon taxes have a positive relation to experts' recommendation of a carbon tax (significant at the 5% level), while existing cap-and-trade schemes have a negative relation to experts' recommendation of a carbon tax (significant at the 5% level).
claimThe survey conducted by the authors of 'Designing Carbon Pricing Policies Across the Globe' focuses on carbon pricing instruments, including sub-types of cap-and-trade and hybrid approaches, but does not analyze non-market instruments.
How the “Scientific Consensus” on Global Warming Affects ... heritage.org Oct 26, 2010 2 facts
claimThe Environmental Protection Agency (EPA) has been working to regulate greenhouse gas emissions through administrative policy, acting as a substitute for the cap-and-trade legislation that Congress failed to pass.
perspectiveThe Heritage Foundation recommends that the United States Congress should refrain from legislating to reduce greenhouse gas emissions, such as cap and trade, renewable electricity standards, or subsidies for clean energy, as long as scientific disputes remain.
The Power of Change: Innovation for Development and Deployment ... nationalacademies.org 2 facts
claimA cap-and-trade program has the potential to efficiently reduce and price greenhouse gas emissions.
measurementA 2010 study by Palmer and colleagues estimated that a national Renewable Portfolio Standard (RPS) requiring 25 percent renewable energy by 2025 would cost $14 per ton of CO2 reduced, whereas a cap-and-trade policy achieving the same reduction would cost $4 per ton.
Global perspectives on energy technology assessment and ... link.springer.com Oct 30, 2025 1 fact
claimCarbon pricing, which includes carbon taxes and cap-and-trade schemes, is a policy instrument for encouraging clean energy.