All about Carbon Pricing: Carbon Tax? Cap and Trade?


Putting a Price on Carbon: A Handbook for U.S. Policymakers (56 Page pdf, Kevin Kennedy, Michael Obeiter, And Noah Kaufman, World Resources Institute, Apr. 2015

Today we review a handbook to implement carbon pricing– either by tax or by cap and trade– in the USA. Among the points noted were that a low to moderate tax alone would be “highly unlikely” to meet the UN’s goal of keeping global warming to less than 2 C (as recommended by 195 states at COP21 in Paris). Technological innovations subsidized by government are also needed and these can be funded from carbon tax revenue as well as other benefits such as tax cuts, return of money to households and electric users, and helping those directly harmed by carbon taxes as well as reducing national debt. Canada and the USA are well behind Scandinavian countries (such as Denmark, Finland, Norway, and Sweden, beginning in the early 1990s)  to establish a national carbon tax, although at the sub-national level,  California and Western states, British Columbia, Alberta, Ontario and Quebec have started to price carbon in recent years. Another interesting point is that a moderate carbon tax of $28/tonne applied to the USA would impact low income earners by 2.5% (and high earners by only 1%). This identifies the need to neutralize the regression effects by subsidizing the low income group by this amount.

carbon pricing basics

To see Key Quotes and Links to key reports about this post, click HERE

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