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.


US carbon pipeline faces setback as residents refuse to cede land rights

By Leah Douglas 03/09/23
Navigator CO2 Ventures’ proposed carbon pipeline project in the U.S. Midwest is struggling to secure a site to store millions of tons of greenhouse gas it hopes to collect from the region’s ethanol plants, as…
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Can a Nation Replace Its Oil Wealth With Trees?

By Dionee Searcey and Others 11/03/22
Evening and the rainforest. A riverbank packed with elephants. Treetops so dense they obscure all but a chimpanzee’s hairy arm. And, as the sun sets, a twinkle on the horizon: an offshore oil platform.
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‘Carbon offsetting’ is just greenwash. Here’s what we need instead

By Adam Ramsey 10/13/22
Fifteen years ago, as Valentine’s Day approached, a trio of entrepreneurs took to the streets of Britain selling a brave new idea. Bearing heart-shaped helium balloons and red red roses, they told passers-by about their…
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Pace of Climate Change Sends Economists Back to Drawing Board

By Lydia DePillis 08/25/22
Economists have been examining the impact of climate change for almost as long as it’s been known to science. In the 1970s, the Yale economist William Nordhaus began constructing a model meant to gauge the…
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As Evidence of Cap and Trade Problems Mounts, California Air Regulators Remain Defiant

By Aaron Cantu 02/24/22
At a state Senate hearing on Wednesday, top regulators dismissed concerns about the ability of California’s cap and trade program to help the state meet its climate goals. The hearing focused on a recent report…
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Price hike marks new era for Calif. cap and trade

By Benjamin Storrow 01/03/22
When California lawmakers passed a 10-year extension of the state’s cap-and-trade program in 2017, it was celebrated as a crowning climate achievement. Four short years later, the program has become a political albatross. Environmental justice…
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This Climate Bill Would Actually Send Checks To Americans. Can It Help Save The Planet And Grow Our Economy?

By John Cumbers 08/03/21
Climate change is an all-hands-on-deck crisis. The problem comes from many quarters of Spaceship Earth, and while many solutions can help solve it, none of them can do it alone. Vegan diets and paper straws…
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The Best Way to Tax Carbon at the Border

By Sara Schonhardt 08/02/21
As more world leaders consider levying border taxes on climate-damaging goods, a new study looks at ways it can be done in countries—including the United States—that haven’t established a domestic market for carbon emissions.
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Washington’s Oil Lobby Pivoted on Climate Change—and Made No One Happy

By Timothy Puko and Ted Mann 07/28/21
The American Petroleum Institute, Washington’s biggest lobby for the oil-and-gas industry, spent decades leveraging its financial muscle to fight almost every green initiative in its path. Then in March, the group signaled an about-face. It…
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Wildfires rage and a tool to combat climate change goes up in smoke

By Debra Kahn 07/27/21
Massive wildfires in Oregon and Washington are torching more than vegetation. They’re also burning through a system used by states and businesses to fight climate change.
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Some In the Environmental Justice Movement Oppose A Carbon Tax. That’s A Problem For Democrats

By Howard Gleckman 07/20/21
While President Biden has called climate change an existential threat, his proposals for addressing it remain modest relative to the enormity of the problem. In part, that’s because he’s taken off the table a carbon…
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Why Pricing Carbon Is Still More Theory Than Reality

By Lars Paulsson 07/15/21
It’s an idea that’s been around for more than two decades: To slow climate change, make polluters pay for the damage they cause. Worldwide, more than 60 nations, states and cities have adopted what’s known…
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Key to Biden Climate Agenda: The Social Cost of Carbon Explained

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

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

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

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…

U.S. State Carbon Pricing Policies

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…

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

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…

Citizens Climate Lobby

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

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…

Carbon Pricing as a Solution to Climate Change

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…

Cap Carbon Now

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...


Why We Don’t Have a Carbon Tax

By Paul Krugman   08/16/22  
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…
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US’s Yellen urges better coordination on carbon policy

By David Lawder   07/09/21  
U.S. Treasury Secretary Janet Yellen called on Friday for better international coordination on carbon-cutting policies to avoid trade frictions, days before the European Union is due to unveil a controversial carbon border tax.
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How Not to Freak Out About a Carbon Tax

By Akshat Rathi   07/06/21  
Indonesia is proposing a carbon tax of about $5 per ton of emissions in a bid to raise state revenues and meet climate goals. That’s less than a tenth of the current price of carbon…
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Close to Home: For wineries, a carbon tax is pro-business

By Robin Lail and Beth Novak Milliken   05/23/21  
Drought, heat extremes, wildfires, power outages, smoke — in the past four years these have become part of our normal experience in the Napa Valley and in all winegrowing regions in the western United States.
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JPMorgan Chase Releases Carbon Reduction Targets for Paris-Aligned Financing Commitment

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

By Levi Pulkkinen   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.…
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The Oxford Offsetting Principles & carbon removal—w/ Eli Mitchell-Larson: RCC podcast S2E62

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…
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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.…
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Economists: A US carbon tax would be progressive

By Gilbert E. Metcalf and Lawrence Goulder   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…
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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”…
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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.
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Western Climate Initiative auction results show resilience of cap and trade and benefit of long-term climate investment strategy

By Katelyn Roedner Sutter   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…
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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).…
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Pa. carbon cap and fee plan projected to cut emissions, hasten coal closures

By Laura Legere   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...
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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…
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Could Hawaii Pass The Country’s First Tax On Carbon Emissions?

By Ryan Finnerty   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…
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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.
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We Can’t Slow Climate Change Without the Energy Companies

By Ted Halstead   01/09/20  
Bigger and faster emissions reductions are possible if environmentalists and industry work together.
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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.
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Lawmakers, criticizing Wolf’s executive order on joining cap-and-trade program, say it’s their call

By Scott Blanchard   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...
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Columbia University economists publish study of bipartisan carbon pricing bill

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

By Robert Walton   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.
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Impervious to a carbon price? The myth of transportation and carbon fees

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…
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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…
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Climate Town Hall: Several Democratic Candidates Embrace a Carbon Tax

By Coral Davenport and Trip Gabriel   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.
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Guest post: What the UK can learn from carbon pricing schemes around the world

By Joshua Burke and Rebecca Byrnes   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…
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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…
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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…
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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.
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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…
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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.
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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…
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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.
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Green New Deal vs. Carbon Tax: A Clash of 2 Worldviews, Both Seeking Climate Action

By Marianne Lavelle   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…
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Bipartisan carbon pricing bill reintroduced in House

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…
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Economists’ Statement on Carbon Dividends

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.
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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.
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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…
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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…
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Bipartisan carbon fee bill introduced in House

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...
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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.
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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…
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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…
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Canada adopts carbon fee and dividend to rein in climate change

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

By Justin Gillis and Jameson McBride   08/14/18  
Congress should require the share of electricity from low-polluting technologies to increase steadily over time.
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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…
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ExxonMobil’s Support for a Carbon Tax is a Sham

By Elliott Negin   07/31/18  
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.
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House Republicans Vote To Ban Carbon Tax As Climate Solutions Caucus Twiddles Its Thumbs

By Steve Hanley   07/25/18  
Carlos Curbelo is co-chair of the House Climate Solutions Caucus, a group that seeks to bring together representatives of both parties to support climate change legislation and policies. “If you want to join as a…
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Blending taxes and cap-and-trade could improve carbon pricing

By Chris Busch   03/21/18  
Although Washington state’s proposed carbon tax failed at the ballot box, carbon pricing remains one of the best policy solutions to mitigate the effects of climate changes as the window to keep global warming below…
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