{"id":114,"date":"2007-06-05T09:50:19","date_gmt":"2007-06-05T14:50:19","guid":{"rendered":"http:\/\/blogs.edf.org\/climate411\/2007\/06\/05\/what-is-the-safety-valve\/"},"modified":"2008-09-19T14:58:25","modified_gmt":"2008-09-19T19:58:25","slug":"what-is-the-safety-valve","status":"publish","type":"post","link":"https:\/\/blogs.edf.org\/climate411\/2007\/06\/05\/what-is-the-safety-valve\/","title":{"rendered":"What is the "safety valve"?"},"content":{"rendered":"

Today’s post is by Mark MacLeod<\/a>, director of special projects for the national climate campaign at Environmental Defense.<\/em><\/p>\n

Some people have proposed a “safety valve” to control the costs of a cap-and-trade policy<\/a> to fight global warming. This post explains what a safety valve is, and why it provides only an illusion of cost management.<\/p>\n

<\/p>\n

In a cap-and-trade program, companies can choose either to lower emissions below the cap, or buy extra allowances. Some worry that if many companies need to buy extra allowances, demand will drive up the price, placing an undue burden on businesses.<\/p>\n

The “safety valve” or “escape hatch” is meant to address this. It specifies that when prices reach a predetermined dollar value, businesses no longer have to rely on the established supply of allowances available in the market. Instead, the federal government makes new allowances available for sale at a specified price – potentially in an unlimited quantity. <\/p>\n

There are two problems with this approach:<\/b><\/p>\n