Popping the CO2RC: An Alternative Load-Based CO2 Cap-and-Trade Instrument for the Electricity Sector

The CO2RC method proposed by the authors can effectively reduce CO2 emissions in electricity markets in a way that is easy to administer, avoids difficult allowance distribution issues, and eliminates leakage because it involves all generators. It provides strong and direct incentives for renewables and efficiency, and promises to work well in markets with incomplete participation.