CARBON TAX/CAP-AND-TRADE

CARBON TAX/CAP-AND-TRADE

Burning fossil fuels is by far the greatest source of the greenhouse gases causing climate change. However, the full cost of fossil fuel energy is not included in the price of the fuel. We pay for that later when we deal with the consequences of global warming. Using a car to illustrate this point, “We pay for the gas, we pay for the car, and we pay for the insurance, but we don’t pay for the pollution that comes out of the tail pipe.”

It is time to raise the price of coal, oil, and gas and put the market on the side of fixing that inequity. This will allow all the other energy sources that do not put CO2 into the ecosystem — solar, wind, geothermal, hydro, and nuclear — to be competitively advantaged because the fossil fuel energy will be relatively more expensive. 

Here are the differences between carbon taxes and cap-and-trade: “A carbon tax directly establishes a price on greenhouse gas emissions — so companies are charged a dollar amount for every ton of emissions they produce — whereas a cap-and-trade program issues a set number of emissions “allowances” each year. These allowances can be auctioned to the highest bidder, as well as traded on secondary markets, creating a carbon price.”  

The challenge in both cases often comes down to how the revenue should be distributed.

Apparently there are 4 possibilities:
1. Climate justice. The money collected should be spent in pursuit of promoting climate justice.
2. Investments in renewables.
3. Tax swaps, such as reductions in taxes of some kind and using the revenues to make up for that.
4. Dividend. Give it back to the people in equal shares. Doing that provides people a regular check, reminding them that carbon is being taxed, which might additionally encourage them to lobby for an even larger tax.

CURRENT NEWS

KEY RESOURCES

Key to Biden Climate Agenda: The Social Cost of Carbon Explained

02/08/21
Michael Greenstone, EPIC Director, said reverting to the Obama-era calculations would yield a social cost of carbon of $125 per ton, assuming it took into account lower interest rates in recent years.

Report of the High-Level Commission on Carbon Pricing and Competitiveness

10/01/20
The potentially adverse impact of carbon pricing on the competitiveness of businesses and economies has been a matter of concern to industry and policymakers.

Putting a Price on Carbon: Evaluating A Carbon Price and Complementary Policies for a 1.5° World

10/01/20
Putting a price on carbon is necessary to reduce emissions but sufficient to get to full decarbonization by 2050. Complementary policies with a carbon price are needed to achieve full decarbonization.

Climate Leadership Council

03/04/20
Economists agree that an escalating carbon fee offers the most cost-effective climate policy solution, sending a powerful price signal to steer businesses and consumers towards a low-carbon future. Accordingly, the first pillar of our bipartisan…

Carbon Pricing as a Solution to Climate Change

02/14/20
FCNL believes that carbon pricing is one of many essential tools that Congress should use to address climate change and shift towards a clean energy economy. While we have not endorsed any particular bill at…

Implementing a U.S. Carbon Tax: Challenges and Debates (2015)

01/14/20
Although the future extent and effects of global climate change remain uncertain, the expected damages are not zero, and risks of serious environmental and macroeconomic consequences rise with increasing atmospheric greenhouse gas concentrations. Despite the…

U.S. State Carbon Pricing Policies

06/01/19
Compared to command-and-control regulations, carbon pricing is a market-based mechanism that creates financial incentives to reduce greenhouse gas (GHG) emissions. Ten states that are home to over a quarter of the U.S. population and account…

Citizens Climate Lobby

01/19/19
Citizens’ Climate Lobby is a non-profit, non-partisan, grassroots advocacy organization focused on national policies to address climate change. By building upon shared values rather than partisan divides, and empowering our supporters to work in keeping…

Carbon Tax Center

01/19/19
The Carbon Tax Center stands at the front lines of the struggle for a sustainable climate and a habitable Earth. Our mission: to generate support to enact a transparent and equitable U.S. carbon pollution tax…

Cap Carbon Now

01/02/19
This blog explains what Pure Cap-and-Dividend means, how it differs from more limited cap-and-trade proposals, and why it is superior to other policy options...

MORE NEWS

Why We Don’t Have a Carbon Tax

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Three and a half years ago, an open letter that more than 3,600 economists eventually signed declared that “climate change is a serious problem calling for immediate national action.” The signatories included 15 former chairs…

JPMorgan Chase Releases Carbon Reduction Targets for Paris-Aligned Financing Commitment

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JPMorgan Chase today released comprehensive steps it is taking in its efforts to align its financing activities with the climate goals of the Paris Agreement. As part of its Paris-aligned financing commitment announced last fall,…

Washington Passed its Cap-and-Trade Climate Legislation. Now What?

By Levi Pulkkinen  Photo: Ted S. Warren/ap   05/10/21  
Washington state lawmakers have passed a sweeping set of environmental regulations meant to cut net greenhouse gas emissions to zero by 2050 while pumping billions of dollars into the state coffers and addressing environmental racism.…

The Oxford Offsetting Principles & carbon removal—w/ Eli Mitchell-Larson: RCC podcast S2E62

05/04/21  
Many corporations, organizations, and governments have made net zero commitments, and most are leaning on voluntary carbon offsetting to achieve these climate goals. But how can we be sure that such carbon offsets demonstrate a…

Researchers demonstrate how carbon taxes can reduce global poverty . . . not exacerbate it

By Sarah DeWeerdt   05/04/21  
The burden of climate change will fall disproportionately on the world’s poor: economic damage from increased temperatures will be worse in the Global South, and within any given country climate disruptions affect poorer people more.…

Economists: A US carbon tax would be progressive

By Gilbert E. Metcalf and Lawrence Goulder  Photo: istock   04/28/21  
Environmental justice concerns have been at the forefront in discussions of U.S. environmental policy. They have been central, in particular, to discussions of proposals for a nationwide carbon tax to address climate change. While economists…

Biden Administration Sets Social Cost Of Carbon At $51 Per Ton

By Steve Hanley   03/06/21  
The Biden administration has set the social cost of carbon at $51 per ton — 7 times higher than the price set by the prior administration. What does that mean? Economists talk about “untaxed externalities”…

Spending $500B On Electric Trucks Could Make Economic Sense, But Only With A Carbon Tax

By Ed Hirs   07/17/20  
Transitioning to a low carbon economy is in progress. It is not political. According to the Yale Program on Climate Change Communication, a majority of Americans of both parties are in favor.
EDF

Western Climate Initiative auction results show resilience of cap and trade and benefit of long-term climate investment strategy

By Katelyn Roedner Sutter  Photo: iStock   05/28/20  
The results of the latest joint California-Quebec cap-and-trade auction were released today. As expected, the auction was significantly undersubscribed, something not seen since February 2017. The low revenue from this auction points to a need…

Is this carbon price enough? Here’s what the experts say

By 5/20/20   05/20/20  
Is this carbon price enough? Here’s what the experts say By Jerry Hinkle, CCL Economics Policy Network CCL volunteers are currently advocating for the passage of the Energy Innovation and Carbon Dividend Act (H.R. 763).…

Pa. carbon cap and fee plan projected to cut emissions, hasten coal closures

By Laura Legere  Photo: Jessie Wardarski/Post-Gazette   04/24/20  
Pennsylvania's plan to begin requiring power plants to pay to release carbon dioxide into the air would reduce greenhouse gas emissions over the next decade and...

How carbon fees promote “free-market innovation”

By Jonathan Marshall   03/12/20  
How carbon fees promote “free-market innovation” By Jonathan Marshall, CCL Economics Policy Network When USA Today recently editorialized in favor of a national carbon fee and dividend to “prevent further catastrophic changes in the world’s…

Could Hawaii Pass The Country’s First Tax On Carbon Emissions?

By Ryan Finnerty  Photo by Simon_sees   03/09/20  
The idea of a carbon tax has broad support from economists and a version was already approved by the state Senate. If agreed to by the House and Gov. David Ige, it would become the…

JP Morgan warns of end to human life in climate report

By Ed Clowes   02/21/20  
The human race could cease to exist without massive worldwide action to tackle global warming, economists at JP Morgan have warned in a hard-hitting report on the "catastrophic" potential of climate change.

We Can’t Slow Climate Change Without the Energy Companies

By Ted Halstead  Photo: Ina Fassbender/Agence France-Presse   01/09/20  
Bigger and faster emissions reductions are possible if environmentalists and industry work together.

An Exxon-Owned Firm Figured Out How to Curb CO2 in 1991

By Eric Roston   12/04/19  
An oil company figured out that only a high carbon price—even for today—could slow emissions.

Lawmakers, criticizing Wolf’s executive order on joining cap-and-trade program, say it’s their call

By Scott Blanchard  Photo: Amy Sisk/StateImpact Pennsylvania   11/20/19  
Some state lawmakers are telling Gov. Tom Wolf he went too far with an executive order for the commonwealth to join a regional effort to cut power plant emissions...

Columbia University economists publish study of bipartisan carbon pricing bill

11/06/19  
A group of five economists from Columbia University’s Center on Global Energy Policy has published “An Assessment of the Energy Innovation and Carbon Dividend Act.” This study offers an up-to-date, independent assessment of the Energy…

Carbon price could allay ‘astounding’ cost to attain New York’s zero carbon target: Report

By Robert Walton  Photo: New York ISO   10/04/19  
Introducing carbon pricing into competitive wholesale power markets could provide billions of dollars in net economic benefits, the New York Independent System Operator (NYISO) said Thursday.

Impervious to a carbon price? The myth of transportation and carbon fees

09/26/19  
Impervious to a carbon price? The myth of transportation and carbon fees By Jonathan Marshall More than 3,500 U.S. economists, including 27 Nobel laureates, insist that carbon taxes offer “the most cost-effective lever to reduce [greenhouse gas] emissions at…

Why carbon tax is crucial to curbing climate change

By Feike Sijbesma   09/22/19  
As world leaders gather in New York City this week for the UN General Assembly, climate change is front and centre. And rightly so: the window for action is closing.The 2015 Paris Agreement is the…

Climate Town Hall: Several Democratic Candidates Embrace a Carbon Tax

By Coral Davenport and Trip Gabriel  Photo: Maddie McGarvey for The New York Times   09/04/19  
At a CNN forum on climate change, the first such prime-time event in a presidential campaign, candidates vowed to take aggressive action to combat global warming.

Guest post: What the UK can learn from carbon pricing schemes around the world

By Joshua Burke and Rebecca Byrnes  Photo: Elena Elisseeva/Alamy Stock Photo   08/02/19  
The UK government has set itself an unprecedented challenge in legislating to reach net-zero greenhouse gas emissions by 2050, the first major economy to do so. It now faces the task of actually reaching that…

U.S. Conference of Mayors urges federal government to put a price on carbon

By Claire Squire   07/31/19  
U.S. Conference of Mayors urges federal government to put a price on carbon By Claire Squire Carbon pricing has been receiving major press lately—tens of millions heard it discussed in the first two presidential debates—and…

Four new carbon pricing bills drop in Congress 

By Danny Richter   07/25/19  
Four new carbon pricing bills drop in Congress By Danny Richter Our push for carbon pricing just took some new, exciting steps forward. First, Florida Republican Rep. Francis Rooney has introduced the bipartisan Stemming Warming…

N.J. rejoins Northeast cap-and-trade program

By Adam Aton   06/17/19  
New Jersey today rejoined the Northeast's Regional Greenhouse Gas Initiative, adding the country's eighth-largest economy to a cap-and-trade regime that already encompassed about one-fifth of the United States' gross domestic product.

75 Business Leaders Lobbied Congress for Carbon Pricing. Did Republicans Listen?

By Marianne Lavelle  Photo: Marianne Lavelle   05/23/19  
Microsoft, Pepsi, Levi's and others are calling for carbon taxes or fees that could scale up innovation fast enough to combat climate change.

Silicon Valley gets in the game for carbon pricing and H.R. 763

By Flannery Winchester   05/21/19  
Silicon Valley gets in the game for carbon pricing and H.R. 763 By Flannery Winchester The Silicon Valley Leadership Group (SVLG) — have you heard of them? Maybe not, but SVLG is a public policy…

Carbon Pricing Reaches U.S. House’s Main Tax-Writing Committee

By Marianne Lavelle   05/16/19  
Less than a year ago, the House voted to denounce carbon taxes. Now, it's discussing a carbon pricing plan supported by some Republican Party luminaries.

The Lovable Carbon Tax

By Teresa Ghilarducci   03/10/19  
Last month, more than 3,500 economists—a record number—signed an open letter calling for a carbon tax to fight climate change. Several of the economists at the meeting told me something to the effect of, “I…

Carbon Tax Plans: How They Compare and Why Oil Giants Support One of Them

By Marianne Lavelle   03/07/19  
Two plans gaining traction would both put a price on fossil fuel pollution and send revenue back to taxpayers as dividends. Only one has big oil companies on board.

Green New Deal vs. Carbon Tax: A Clash of 2 Worldviews, Both Seeking Climate Action

By Marianne Lavelle  Photo: Getty   03/04/19  
Congress is in uncharted territory on climate policy. For the first time ever, lawmakers face competing approaches to reviving U.S. climate action. And despite hostility from the White House, each has significant support and the…

Bipartisan carbon pricing bill reintroduced in House

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A group of lawmakers in the U.S. House of Representatives has reintroduced the Energy Innovation and Carbon Dividend Act, the groundbreaking bipartisan climate solution to price carbon, give revenue to households and bring greenhouse gas…

Economists’ Statement on Carbon Dividends

01/16/19  
Global climate change is a serious problem calling for immediate national action. Guided by sound economic principles, we are united in the following policy recommendations.

Forget the Carbon Tax for Now

By Justin Gillis and Jameson McBride   12/27/18  
It’s politically toxic. There are other ways to cut greenhouse gas emissions.

D.C. passes strong clean energy bill with price on carbon

By Jamie DeMarco   12/18/18  
D.C. passes strong clean energy bill with price on carbon By Jamie DeMarco After a multi-year, grassroots-led campaign, today the Washington, D.C., City Council passed the strongest climate legislation anywhere in the country. The Clean…

How does the new carbon pricing bill stack up?

By Jerry Hinkle   12/07/18  
How does the new carbon pricing bill stack up? By Jerry Hinkle, CCL Economics Policy Network Upon the introduction of the Energy Innovation and Carbon Dividend Act, legislation authored by Representative Deutch and others (herein referred…

Bipartisan carbon fee bill introduced in House

11/28/18  
Five members of the U.S. House of Representatives from both parties just introduced the most significant climate change legislation Congress has seen in over a decade...

Republicans say they want free-market innovation. Then they should want a carbon tax.

By Catherine Rampell   11/26/18  
Republicans’ latest excuse for ignoring climate change — like all their other excuses — gets the problem exactly backward.

A Carbon Tax Wave? 7 States Considering Carbon Pricing to Fight Climate Change

By Marianne Lavelle   10/29/18  
Considering the defeat of a carbon tax in Washington this last election, it is stunning to see that we now have 7 states considering carbon pricing! Adding these states to those that already have some…
Vox

Washington state has a ballot to approve a carbon tax. Revenues would go to clean air, water, energy, and communities

By David Roberts   10/26/18  
Lots of controversy. The fee would be charged to large carbon emitters and fossil fuel sellers based on the carbon content of the fuels sold or used in the state. The costs would come back…

Ottawa to announce rebates in provinces without carbon tax

By Shawn McCarthy   10/23/18  
Canadians in four provinces − including the election battleground of Ontario − will receive carbon-tax rebates that will leave most families financially better off, with cheques arriving ahead of the next federal campaign, Prime Minister…
CBC

Trudeau promises rebates as Ottawa moves to levy carbon tax on provinces outside the climate plan

By John Paul Tasker   10/23/18  
The federal Liberal government will slap a carbon tax on fuels in provinces and territories with no adequate emissions pricing plans of their own — but will send annual rebates to Canadian families to offset…

Canada adopts carbon fee and dividend to rein in climate change

10/23/18  
Carbon fee and dividend, the solution to tackle climate change proposed by Citizens’ Climate Lobby, has emerged as the default policy in Canada to price carbon and reduce the greenhouse gas emissions contributing to global…

Taxing polluters to fight climate change: a conversation with a Nobel Prize winner in economic science

By Coral Davenport   10/13/18  
Decades ago, Professor William D. Nordhaus launched his plan to price carbon. That it has not happened in the United States is political in his view. He is hoping for grownups to resolve that. He…

A carbon tax is right for environment and economy

By Jerry Hinkle   09/17/18  
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Coast to coast state carbon pricing efforts

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Here’s How to Cut Greenhouse Gas Emissions Without Taxing Them

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The benefits of distributing carbon fees as dividends and the nuanced differences between various plans

By Mike Shatzkin   07/31/18  
There are at least three entities pushing a version of the same basic idea, which is to tax (although none of them use that word: it's not a "tax", it's a "fee") the CO2 resulting…

ExxonMobil’s Support for a Carbon Tax is a Sham

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ExxonMobil executives just had another opportunity to convince skeptics that their support for a carbon tax is genuine. They blew it. And, it’s not the first time.