From The Energy Collective via Energy Outlook (Implicit Carbon Price):
In other words, within reasonable bands of uncertainty about how
emissions might change from 2007 levels before cap & trade started,
and how rapidly the annual caps tightened toward achieving 1990 levels
by 2020, the implied cost per ton of CO2 equivalent [based on the Obama carbon auction revenue projections -- ed.] looks pretty modest
in this period--the equivalent of roughly 1 cent per kWh for
coal-generated electricity or 11 cents per gallon of gasoline.
Cap & trade still faces many hurdles, including the chance of a significantly different concept emerging from Congressional debate or a postponement due to the weak economy. However, at least in terms of the assumptions built into the budget, my back-of-the-envelope estimate indicates that it might not cause dramatic increases in energy prices in the first few years of the program, although the sums collected across the entire economy would still be material.
Cap & trade still faces many hurdles, including the chance of a significantly different concept emerging from Congressional debate or a postponement due to the weak economy. However, at least in terms of the assumptions built into the budget, my back-of-the-envelope estimate indicates that it might not cause dramatic increases in energy prices in the first few years of the program, although the sums collected across the entire economy would still be material.
