CBO and the staff of the Joint Committee on Taxation projected the budgetary effects and
the change in emissions of carbon dioxide (CO2) and other greenhouse gases (GHGs) that
would stem from a potential tax on those emissions.
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Deterring the use of fossil fuels, such as coal, fuel oil, and gasoline, is crucial to reducing the buildup of heat-trapping greenhouse gases in the atmosphere. Carbon pricing provides across-the-board incentives to reduce energy use and shift to cleaner fuels and is an essential price signal for redirecting new investment to clean technologies.
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 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.
The Nicholas Institute assesses carbon pricing schemes for environmental integrity, cost-effectiveness, and distributional equity. Since the 2007 landmark Supreme Court decision Massachusetts v. EPA, we have explored carbon trading as a method for regulating emissions under the Clean Air Act. More recently, we have begun to analyze the role of power sector carbon pricing to maximize air quality benefits from electrifying the transportation sector. We also facilitate public workshops and state convenings to socialize the carbon pricing concept and consider program design options. Finally, Institute staff work with faculty partners at Duke to study methods for calculating the social cost of carbon for use in carbon markets or traditional regulation.
Q&A with Frank Wolak, director of the Freeman Spogli Institute for International Studies (FSI)’s Program on Energy and Sustainable Development(PESD), and Mark Thurber, associate director for research of PESD. Written with Joshua Kenway.
Climate change presents serious threats to the economy, the environment and national security. To address these threats, a growing number of influential businesses, scientists, NGOs, policymakers, and thought leaders are calling for a carbon tax, which would put a price on carbon dioxide (CO2) and other greenhouse gas (GHG) emissions. Economists point to a price on GHGs as a key part of a strategy to address climate risks cost-effectively.