DOs and DON'Ts for Creating Carbon Price Safeguards

As the Senate takes up energy and climate legislation, many are considering the best approach to meet a strong cap on carbon emissions while assuring that carbon allowance prices remain reasonable and that market abuses are prevented. The core tools we need are a means to provide additional allowances to the market without breaking the law’s emissions cap, and a robust set of market regulation safeguards against market abuse. With these tools, Congress can deter price manipulation and place effective limits on prices without compromising the law’s vital climate protection objectives.