Foundation Funds Research on Cap-and-Trade Issues

The Climate Change Initiative of the Doris Duke Charitable Foundation (DDCF) has awarded three grants totaling more than $1.6 million to the Nicholas Institute for Environmental Policy Solutions at Duke University, Resources for the Future, and the World Resources Institute to conduct nonpartisan research on critical issues in the ongoing debate about cap-and-trade legislation and complementary federal policies.

“This research will delve into the details of how a comprehensive cap-and-trade system might be designed,” said Andrew Bowman, director of the Climate Change Initiative at DDCF. “With nonpartisan insights and timely analysis, these leading organizations will provide policymakers with research and policy recommendations they can use to make informed decisions and maximize benefits for the environment and the economy.”

As federal policymakers move closer to acting on climate change, these grants will allow for a detailed analysis of issues of concern that have already emerged, including those related to the design of a carbon market, the lessons to be learned from state and regional climate efforts, and the impact various policy approaches could have on the economy both nationwide and at a regional scale. At the same time, the grants also provide the recipient organizations with the flexibility they will need to respond quickly to policymakers as new questions emerge.

The Nicholas Institute received a grant of $301,727, which will enable further collaboration between its climate policy team and experts in finance and securities law on research related to the design of a carbon market under a cap-and-trade program.

The project will explore the unique financial aspects of a carbon market, evaluate regulatory structures and best practices, and propose a legal structure to regulate carbon allowances. The results will be disseminated among decision makers in the public and private sectors. As an initial step in this process, the Nicholas Institute soon will convene a workshop in Washington, D.C., bringing together emitters, traders, policymakers, and former financial market regulators. The meeting will grapple with the fundamental elements of a carbon market, as outlined in the Institute’s recent working paper, "U.S. Carbon Market Design: Regulating Emission Allowances as Financial Instruments."

Resources for the Future will use a grant of $598,227 to support three related research initiatives aimed at answering some of the questions most commonly asked by policymakers.

Two initiatives focus on understanding the economic impacts that climate policies would have on different parts of the country. The first of these will focus on understanding the effects of carbon pricing on energy-intensive industries in terms of jobs and output. The second will examine the effects of carbon pricing on household costs, such as energy bills. A third initiative will look at what role forests play in climate change and whether a new carbon market could advance efforts to reduce the amount of carbon in the atmosphere by conserving tropical forests.

A grant of $750,000 will enable the World Resources Institute to continue to contribute to federal climate and energy policy debates over the next 18 months.

WRI’s priorities will be to analyze the economic implications and opportunities of proposed climate change policies; assess the greenhouse gas implications of non-climate federal policies (transportation, economic stimulus and energy policies that may be forthcoming); and identify specific lessons and best practices from state and regional climate efforts, translating them for federal policymakers.