Creating Technologies to Reduce Greenhouse Gas Intensity: Policy Options and Opportunities

Can a cap-and-trade regime lead to investment in the R&D and technology to achieve the desired long-term reductions in greenhouse gas emissions? Dr. David Montgomery considers this question by analyzing the technology development assumptions of the cap-and-trade program and concludes that the pricing structure of an emissions trading system actually undermines the incentives to invest in long-term R&D.  He then outlines several options for devising effective R&D policies and programs.

W. David Montgomery, Vice President, directs CRA?s Environment practice. He is an internationally recognized authority in energy and environmental policy and regulation. Dr. Montgomery also has a special expertise in the area of energy price forecasts, having supervised the U.S. Department of Energy?s energy forecasting and economic analysis activities for a number of years. He was previously Deputy Assistant Secretary of Energy and Assistant Director of the Congressional Budget Office, with responsibility for all natural resource and commerce program analysis, and has taught at the California Institute of Technology and at Stanford University. Dr. Montgomery has published widely on oil, natural gas, and electric utility regulation; on the use of economic incentives in regulatory programs; and on the taxes and environmental regulations affecting energy industries.

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