In the absence of comprehensive federal climate legislation, state governments and the executive branch have moved forward with efforts to reduce greenhouse gases. Two important components of effective policies are (1) tools to limit the potential for carbon emissions to shift outside a...

California established a cap-and-trade market for greenhouse gas emissions as the core instrument in its comprehensive climate policy. State law requires that market rules minimize leakage of emissions to other states — a particularly important constraint in the electricity sector, where...