News

June 02, 2015

RFF Publishes New Report on Credit Trading

A new report entitled "New Markets for Pollution and Energy Efficiency: Credit Trading under Automobile Greenhouse Gas and Fuel Economy Standards" examines the prospects and implications for credit trading under the new CAFE and GHG rules.  In the report, the authors, Virginia McConnell and Benjamin Leard of Resources for the Future, evaluate the current functionality of the CAFE and GHG credit markets and assess the potential for there to exist well-functioning markets in the future.

Based on their research, the authors make the finding that the trading of credits has been somewhat limited to date for a number of reasons, such as a lack of price transparency and the fact that CAFE and GHG standards, though increasing in stringency, still do not result in noncompliant fleets for most automakers.  The authors predict, however, that as the standards become increasingly more stringent, and as manufacturers begin to utilize more efficient and transparent trading processes (such as the auction platform operated by Mobilis), CAFE and GHG credit markets will likely become more robust in time and help drive costs of compliance down for manufacturers

For a copy of the paper, click here.

 

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Our easy-to-use online trading platform makes it possible for automakers, engine manufacturers, fuels producers, and fleet operators to buy and sell regulatory compliance credits via forward auctions and reverse auctions.
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In a Forward Auction, a company with excess credits initiates an auction to sell credits and companies needing credits bid to buy them. As the auction proceeds, bidding drives up the price of the credits. When the auction ends, the company that has offered to pay the most for the credits is the winner.

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In a Reverse Auction, a company needing credits initiates an auction to purchase credits and companies with excess credits bid to sell their credits to that company. As the auction proceeds, bidding drives the price of the credits down. When the auction ends, the company that has offered to sell their credits for the least amount of money is the winner.

See An Example