Cap and Trade Revenue

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This is from the budget outline released by the Obama administration on Thursday:

After enactment of the Budget, the Administration will work expeditiously with key stakeholders and Congress to develop an economy-wide emissions reduction program to reduce greenhouse gas emissions approximately 14 percent below 2005 levels by 2020….

I wonder what their economic assumptions are here?  Here’s the revenue timeline, starting in 2012:

At first glance, this strikes me as odd.  With only slight variations, it assumes $80 billion in revenue every year between 2012 and 2019.  But that doesn’t really make sense.  What you normally expect with a carbon trading program is that you begin with a high cap (carbon emissions in 2012 will probably start out 10% higher than 2005 emissions) and then ratchet the cap down every year after that.  As the cap goes down, the price of permits goes up.  It’s true that the number of permits goes down at the same time, but this shouldn’t be enough to make up for the higher permit price.  Overall, until the green technology buildout hits a critical mass, the revenue from the program should go up considerably over time.

But not in this one.  I wonder why?

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THE BIG PICTURE

You expect the big picture, and it's our job at Mother Jones to give it to you. And right now, so many of the troubles we face are the making not of a virus, but of the quest for profit, political or economic (and not just from the man in the White House who could have offered leadership and comfort but instead gave us bleach).

In "News Is Just Like Waste Management," we unpack what the coronavirus crisis has meant for journalism, including Mother Jones’, and how we can rise to the challenge. If you're able to, this is a critical moment to support our nonprofit journalism with a donation: We've scoured our budget and made the cuts we can without impairing our mission, and we hope to raise $400,000 from our community of online readers to help keep our big reporting projects going because this extraordinary pandemic-plus-election year is no time to pull back.

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