Forecasting Supply and Demand Balance in California’s Greenhouse Gas Cap and Trade Market

by Elizabeth M. Bailey, Severin Borenstein, James Bushnell, Frank A. Wolak and Matthew Zaragoza-Watkins

[From a Climate Wire article by , sub. req'd] A new paper from economists involved in the design of California’s landmark cap-and-trade system for greenhouse gases estimates that prices are likely to remain near the market floor that regulators have installed.

There is an 80 percent chance that carbon prices will be at or near the price floor in 2020 but also an 11 percent chance that prices will go higher than the state has provided for, according to the state-commissioned paper, released yesterday by several high-profile economists who have worked on California’s program…

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