Carbon Price Volatility
Greenhouse gases generated by human activities are contributing to the problem of climate change. For those who care about mitigating extreme weather and wildfires, the key global policy objective of this decade is to reduce carbon emissions. One approach is the policy known as cap-and-trade, used by jurisdictions that create about 18 percent of global emissions. “Cap-and-trade” is shorthand for emissions trading, which is a market where regulators issue a limited number of emissions permits, and firms trade these permits among each other. But lately the markets have been volatile. How well do cap-and-trade systems function when the global markets […]
Fostering Clean Growth
To address environmental concerns, many governments impose pollution regulations on companies or firms. A key goal of such regulations is to spur the development of innovative clean technologies. Empirical evidence suggests that such strategies do, in fact, work. But how effective are regional regulations when dealing with multinational corporations in a globalized economy? “Environmental policies are often confined to local jurisdictions, whereas industrial production operates on a global scale. This mismatch poses a challenge for policymakers,” said Wei Xiang, Assistant Professor of Economics at the University of Michigan. “Firms, especially multinationals, can move their pollution-intensive operations to foreign jurisdictions. This […]