The needs and priorities of the state should be considered before the needs of individuals when designing state-level mass-based carbon allowance allocation system under the Clean Power Plan, the Brattle Group said in a report Monday. “By deferring any examination of wealth transfers among interested parties to a later stage, policymakers will be able to focus on achieving the best outcome for the entire state as defined by policy objectives. This approach makes it less likely that a state would craft a suboptimal policy based on the concerns of a small number of vocal constituencies with concentrated interests.” the report says.
States’ needs and priorities will vary, of course, as their energy systems vary considerably. “For most states, we assume that these objectives will include meeting the CO2 emissions requirements while keeping electricity bills and electric system costs as low as possible,” according to the economic consulting firm. “Some states may also specify a number of other objectives and considerations, such as retention and creation of jobs, financial implications for generation owners, technology development goals, and localized environmental impacts.”
Once an allowance allocation system is developed to efficiently meet the state’s goals, officials can turn their attention to the needs of individual constituents, the report says. “One advantage of a mass-based plan is that it creates a late-stage opportunity to use CO2 allowance allocations to address the concerns of any parties that are adversely affected by the plan.” Essentially, the sale of allowances will create a large economic value, which can be used to address consumers’ concerns.
