Under cap-and-trade systems, governments set a maximum allowable amount of emissions each year but permit companies to buy and sell allowances. This gives them incentives to cut emissions so they don’t need to buy as many allowances, or so they can sell their spares.
“I don’t think there’s a huge expectation that the EU or China are going to do anything radically different” based on the U.S. election outcome, said Arthur van Benthem, professor of business economics and public policy at the University of Pennsylvania’s Wharton School.
If anything, he noted EU policy measures that will shrink the supply of permits – a change expected to drive up permit prices.
In California auction prices have run around double their range of five years ago, though the most recent auction settled at $30.24 in August, lower than May’s price of $37.02.
