Consequences of alternative U.S. cap-and-trade policies: controlling both emissions and costs

The U.S. Congress continues to debate a potential cap-and-trade program for the control of greenhouse gas emissions. The economic effects of such a bill remain in dispute, with some arguing that a cap-and-trade program would create jobs and improve economic growth and others arguing that the program would shift jobs overseas and hit households with large energy price increases. This report applies a state-of-the art global economic model to the question and offers insights to policymakers about how to design the program to achieve long-run environmental goals at minimum cost and with low risk to the economy. The report analyzes a range of possible cap-and-trade policies for the U.S. The seven policy scenarios analyze meet similar long run environmental objectives, but differ in their emissions trajectories and costs. The first policy analyze hits the emissions targets proposed by the Obama administration. The second hits the targets in an early