I like your "increasing marginal price" mechanism. Alternately, Waxman-Markey attempts to preserve the price signal by encouraging local distribution companies to rebate consumers through lump sums rather than lower prices. I'm not an authority on how it turned out - Stavins seemed to think it was going to be fine, whereas this Climate Progress post parses how "airtight" the language is (the answer seems to be "indicative, but not totally airtight.")
Update: Michael agrees in the comments. For those interested, here's the relevant passage in its entirety from Kerry-Boxer (passed by a friend - apparently it's on p664-665, but I don't have a link):
In general, an electricity local distribution company shall not use the value of emission allowances distributed under this subsection to provide to any ratepayer a rebate that is based solely on the quantity of electricity delivered to such ratepayer. To the extent an electricity local distribution company uses the value of emission allowances distributed under this subsection to provide rebates, it shall, to the maximum extent practicable, provide such rebates with regard to the fixed portion of ratepayers’ bills or as a fixed credit or rebate on electricity bills."Solely" and "to the maximum extent practicable" leave some wiggle room, but overall this looks pretty good.
R:
ReplyDeleteThanks for your comment. I must officially eat humble pie on this post: demand side incentives are clearly in place on Waxman-Markey and I should have known that. I've updated my post accordingly.
No worries. I'm sure my blog is riddled with inaccuracies, I just lack the avid readership to ferret them out :)
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