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Substitution and Technological Change under Carbon Cap and Trade: Lessons from Europe

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Timothy Considine, Donald Larson
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This report studies the results of the European Union's Emissions Trading System--a cap-and-trade regulation--and it's impact on fuel switching for electricity production. This report analyzes short-term restrictions on fuel switching due to technology restrictions and variable inputs. The result of this analysis identifies that fuel-switching capacities are limited and that nations should begin planning for low-carbon futures early and allow for flexibility on how to achieve emission reduction goals.