A cap-and-trade system is more likely than a carbon tax system to trigger the adoption of clean energy technologies, according to a study by Professor Yihsu Chen at the University of California, Merced.
The study — coauthored by Chung-Li Tseng of the University of New South Wales in Australia and published this month in The Energy Journal, a quarterly journal of the International Association for Energy Economics — also found that the volatile pricing of a cap-and-trade system could lead to earlier adoption of clean technology by firms looking to hedge against carbon cost risks.