Tradeable CO sub 2 emission permits for cost-effective control of global warming

Many current global warming mitigation policy proposals call for large, near-term reductions in CO{sub 2} emissions, thereby entailing high initial carbon emission tax rates or permit prices. This paper claims that these high initial tax rates or permit prices are not cost-effective in achieving the desired degree of climate change control. A cost-effective permit system is proposed and described that, under certain assumptions, would allow markets to optimally lead permit prices along a gradually increasing trajectory over tie. This price path presents the Hotelling result and would ease the abrupt, inefficient, and costly adjustments imposed on the fossil fuel and other industries in current proposals. This finding is demonstrated using the Argonne Model, a linear programming energy- environmental-economic model that allows for intertemporal optimization of consumer energy well-being. 12 refs., 3 figs., 1 tab.