"Price collar plus"

With Barbara Boxer considering a modified price collar for the Senate version of the climate bill, Joe Romm points to his preferred version, "price collar plus".

For context, here the Brookings Institute on the benefit of the price collar:

By preventing the policy from being either unexpectedly lax or unexpectedly stringent, a price collar protects both investors in green technologies and households and preserves strong incentives to abate.

There's broad agreement that price floors are a good idea since they reduce the downside for important investments; price caps are more controversial, because cap-busting safety valves run counter to the very principle of cap-and-trade.

Enter price collar plus, in which the ceiling is maintained by auctioning additional credits from a "strategic reserve", such that "the allowances the government sells are, to start, skimmed off of the emissions caps from 2012 to 2050." In other words, if the price gets too high, you borrow allowances from future years. Joe thinks this is win-win:

Indeed, fence-sitting Senators and industries can legitimately see price collar plus as achieving stronger cost-containment protection than their analysis suggests the House bill now provides, including protection against speculators running the permit price up, while progressives can legitimately see PCoP as achieving better environmental outcomes than their analysis suggests the House bill now provides.

I agree that price collar plus is a better mechanism than simply auctioning off additional allowances created from thin air, but the positive outcome only holds if the cap is ironclad in the later years we'd be "borrowing" GHG allowances from. And given the vulnerability of any piece of legislation to politically-driven meddling down the road, this strikes me as a little bit like addressing government budget overruns by adding debt for future generations to pay off.