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How to make Cap/Trade fail. Pay reps to give your industry "free allocations".
To make it work you reduce the free allocations each year. In fact anytime the price drops the to floor price you reduce the amount every allocation is worth; and increase the floor price each quarter.
Its another example of putting the fox in charge of the hen house and then wondering why you are losing hens.
Zero prices don´t mean a cap-and-trade scheme has failed. They indicate it has met its targets. A cap-and-trade system that is tweaked to maintain a price is in effect a carbon tax.
It is a strong objection to cap-and-trade that actual allocations are not, and in the real world cannot be, determined by working back from a scientifically credible target such as 450 or 350 ppm atmospheric CO2. If the targets are going to be fixed by political log-rolling, a carbon tax is much more transparent and harder to game.
Exactly why I don't understand the appeal of cap-and-trade. Our goal should be to reduce CO2 as much as possible at a reasonable cost, not to achieve CO2 emissions at, but not below, a fairly arbitrary cap.