Carbon Pricing


It is generally accepted by climate-change activists that burning fossil fuels, which put CO2 into our ecosystem, is the principal cause of climate change. And it is generally accepted that “putting a price on carbon”, taxing the fuels that emit the CO2 (and therefore price-favoring energy sources that do not) is a useful strategy.

Putting a price on carbon can be done two different ways. One is called “cap and trade” — setting limits on how much CO2 we will accept and selling “permits” to burn the fossil fuel that will produce that limited amount. The demand for those licenses effectively determines the price paid for them.

The other method is simply to “tax” the fossil fuels based on the emissions they generate.

There is a difference of opinion among activists about which is better. But the big differences of opinion, the ones that cause disagreements that slow down the efforts to put a price on carbon, are about “what to do with the revenue raised”.

Dedicated activists often want to devote those revenues to promote green energy or to redress people suffering climate injustice. Other activists (including one of the founders of this site) support carbon-fee-and-dividend, by which all the revenue raised pricing carbon is simply returned in equal shares to everybody. This approach has the advantage of being much more politically palatable since most people — 70 percent or more — get more back in their carbon “dividend” than the fees cost them in increased energy costs.

Our own Mike Shatzkin spoke to these issues at the Sarasota Institute in the spring of 2020.

Carbon pricing | ACCIONA Sustainability


WA’s carbon-pricing auctions collect nearly $1.5 billion as allowances reach record price

By Amanda Zhou and Isabella Breda 09/06/23
The price of Washington’s carbon emission allowances reached an all-time high in the state’s fourth auction last week, with revenue from the program nearing $1.5 billion in its first year.
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Carbon Taxes vs. Cap-and-Trade: Which is the Better Policy?

Climate change is an urgent global issue that requires immediate and effective policy solutions. As governments around the world grapple with the best way to address this crisis, two main policy approaches have emerged: carbon…
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Carbon Pricing, Environmental Justice, Compromise

By Meredith Fowlie 08/07/23
As climate change gets scarier, the need for dramatic GHG reductions becomes clearer. Here in California, we’re realizing just how challenging this is going to be.
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Carbon trade-offs: How firms respond to emissions controls

By Maria Cecilia Bustamante and Francesca Zucchi 08/05/23
Given that regulatory efforts to control carbon emissions are intensifying around the world, understanding the incentives that carbon pricing creates for firms is paramount.
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Is a luxury carbon tax a fair and equitable way to tackle climate change?

By Sarah DeWeerdt 07/25/23
Reducing the amount of energy used by the top quintile of energy users in Europe could cut total household greenhouse gas emissions by almost 10%, according to new research. The study is one of two…
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How Canada Rolled out a Carbon Tax Without Calling It One

By Akshat Rathi 07/18/23
Carbon taxes are an economist’s dream and a politician’s nightmare, as climate solutions go. Get them right and the emissions warming the planet decline. Get them wrong and you face grumpy voters and businesses. Taxes…
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EPA’s carbon metric may underestimate climate damage — at least for now

By Jean Chemnick 07/17/23
EPA’s draft social cost of greenhouse gases excludes key factors that could eventually lead the agency to place an even higher value on avoiding emissions, according to peer reviewers tapped to review the key climate…
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Bill McKibben talks YIMBY and clean energy permitting reform

By Samantha Johnstone 07/06/23
CCLers recently had the privilege to hear from Bill McKibben joined volunteers watching virtually and in-person at the Washington, D.C., conference alike. McKibben, a renowned author, educator, environmentalist and co-founder of and Third Act,…
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A Renowned Economist’s New Idea for Stopping Climate Change

By Peter Coy 06/26/23
Robert Litterman is a legend on Wall Street. He earned a doctorate in economics from the University of Minnesota in 1980. In his 23 years at Goldman Sachs he oversaw quants, managed risk and developed,…
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Confronting Climate Change Through Carbon Pricing: Is the Policy Politically Feasible and Durable?

In this edition of Wilson Center NOW, we are joined by Barry Rabe, the Arthur Thurnau Professor of Environmental Policy and the J. Ira and Nicki Harris Family Professor at the Gerald R. Ford School…
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Carbon Charges Can Put Investors’ Money Where Their Mouth Is On Climate Change

By Sarah Keohane Williamson 06/14/23
Over the past decade, many countries and companies have made ambitious pledges to reach net zero greenhouse gas emissions to tackle climate change. For investors, however, the implementation of similar commitments in investment portfolios has…
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Carbon Taxes in Theory and Practice

By Alex Muresianu 05/02/23
Among economists, the carbon tax is a popular solution to climate change. The case for the carbon tax is clear in the abstract. Find out the social cost of carbon emissions, then tax carbon emissions…
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How Carbon Dioxide Emissions Would Respond to a Tax

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…


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…

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.

Carbon Pricing

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…

Why Price Carbon?

There is widespread recognition and scientific consensus that in order to stabilize the climate and prevent the worst consequences of the climate crisis, greenhouse gas emissions must be reduced by at least 80 percent by…

Carbon Pricing 101

When carbon emissions cost money, we produce less of them.

How Can the US Reduce Climate Change? Carbon Pricing

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.

Carbon Tax Research Initiative

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,…

What is Carbon Pricing?

Carbon pricing is an approach to reducing carbon emissions (also referred to as greenhouse gas, or GHG, emissions) that uses market mechanisms to pass the cost of emitting on to emitters. Its broad goal is…

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…

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 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…


WA’s first greenhouse-gas-allowance auction raises estimated $300 million

By Isabella Breda   03/07/23  
Washington’s first auction of greenhouse-gas pollution allowances raised an estimated $300 million in a closely watched sale as companies, consumers and the Legislature get their first glimpse of the cost of emitting in the state.
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Revealed: more than 90% of rainforest carbon offsets by biggest provider are worthless, analysis shows

By Patrick Greenfield   01/18/23  
The forest carbon offsets approved by the world’s leading provider and used by Disney, Shell, Gucci and other big corporations are largely worthless and could make global heating worse, according to a new investigation.
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New study more than triples estimated costs of climate change damages

By Dana Nuccitelli   09/08/22  
A peer-reviewed analysis by two dozen experts more than triples – from $51 per ton of carbon dioxide to $185 per ton – the federal government’s estimate of the “social cost of carbon” (SCC)...
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Comprehensive Evidence Implies a Higher Social Cost of CO2

By Kevin Rennert, Frank Errickson and Others   09/01/22  
The social cost of carbon dioxide (SC-CO2) measures the monetized value of the damages to society caused by an incremental metric tonne of CO2 emissions and is a key metric informing climate policy. Used by…
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Carbon should cost 3.6 times more than US price, study says

By Drew Costley and Others   09/01/22  
Each ton of carbon dioxide that exits a smokestack or tailpipe is doing far more damage than what governments take into account, researchers conclude in a scientific paper...
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Supreme Court allows Biden climate regulations while fight continues

By Robert Barnes and Anna Phillips   05/26/22  
The Supreme Court on Thursday allowed the Biden administration, for now, to use a higher estimate for the societal cost of rising greenhouse gases when federal agencies draft regulations.
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When will ‘economic growth’ account for environmental costs?

By David Shearman   05/12/22  
Human health and the natural environment are indivisible. A recent article in the journal The Lancet reminds us that “economic decisions on the environment have major impacts on human health, and health and wellness depend…
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Biden presses 5th Circuit to uphold key climate metric

By Lesley Clark   05/05/22  
The Biden administration and red states are dueling in multiple courts after a federal judge temporarily blocked use of the social cost of carbon.
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Biden Administration Sets Interim Greenhouse Pollution Cost Estimates

By Nexus Media   03/01/22  
The Biden administration announced it will use Obama-era calculations of the “social cost” of three greenhouse gas pollutants while an interagency working group calculates a more complete estimate, the White House announced Friday. Often described…
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As climate change costs mount, Biden seeks to price damages

By Matthew Brown   02/23/22  
In the coal fields of eastern Montana, climate change is forcing a stark choice: halt mining that helped build everything from schools to senior centers or risk astronomical future damage as fossil fuel emissions warm…
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What is the ‘social cost of carbon’? 2 energy experts explain after court ruling blocks Biden’s changes

By Jim Krane and Mark Finley   02/21/22  
When a power plant runs on coal or natural gas, the greenhouse gases it releases cause harm – but the power company isn’t paying for the damage.
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Interim Social Cost Of GHGs Halted By Judge

By Nexus Media   02/14/22  
A federal judge barred the Biden administration from using its interim revised social costs of greenhouse gas pollution in crafting regulatory policy on Friday. The ruling by Trump-appointee James Cain in a federal court in…
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Not Even Free Money Can Fix a Carbon Tax

By Robinson Meyer   01/26/22  
Once more unto the breach, my friends—once more to talk about carbon pricing. For 40 years, economists and environmentalists have proposed a simple solution to climate change: Put a price on it. If the government…
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Carbon prices, long in the dumps, surge in U.S. and Europe

By Benjamin Storrow   12/09/21  
Emission allowances in the Regional Greenhouse Gas Initiative, a cap-and-trade program covering power plants in the Northeast, closed at a record-high $13 per ton at auction last week.
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Carbon Fees Could Lead to Substantially Lower Emissions

By David Worford   11/29/21  
Carbon fees implemented across industries could significantly reduce energy-related emissions in the United States, according to an analysis by the US Energy Information Administration (EIA).
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Pricing carbon is vital to US climate goals and politically unlikely, but there is another way, analysts say

By Herman K. Trabish   11/24/21  
Imposing a federal price on carbon to drive decarbonization is both urgent and unlikely, but there may be a workaround, according to some economists and policymakers.
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The Latest Farm Product: Carbon Credits

By Elizabeth G. Dunn   11/23/21  
Eight years ago, Kevin Prevo started making changes to the land in southern Iowa that his family has farmed for five generations. Mr. Prevo stopped tilling the fields between crop cycles and started planting cover…
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Is 24/7 carbon-free energy the right goal?

By David Roberts   11/19/21  
Last week, I wrote an introduction to the hot new trend in energy: 24/7 carbon-free energy (CFE), i.e., matching a company or city’s power consumption with production of clean electricity throughout the day, every hour…
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If the world loves forests, it should put a price on their carbon

THE WORLD'S leaders may quail at extinguishing coal-fired plants or raising petrol prices, but they can be relied upon to embrace one ally in the fight against climate change: the tree. For all his claims…
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President Biden’s Silk Purse: Young People Will Sit in Judgment

By James E. Hansen   10/26/21  
My talk described the danger of climate change and the fundamental actions needed to avert that danger. The existential threat is the potential to initiate unstoppable sea level rise to a level that causes loss…
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Opinion: Why the U.S. refusal to tax carbon creates a windfall for Saudi Arabia and Russia

By the Editorial Board   10/16/21  
There are two big risks in the world’s impending transition to a low-carbon energy future. The first, of course, is that it may fail to achieve sufficient emissions reductions to prevent a climate debacle. The…
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Why the US should establish a carbon price either through reconciliation or other legislation

By Sanjay Patnaik and Kelly Kennedy   10/07/21  
From the start of his term, President Biden has indicated that he wishes to pursue an ambitious climate agenda. On his first day in office, he recommitted the U.S. to the Paris Climate Agreement and…
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Carbon tax fight brews among Democrats

By Nick Sobczyk, Geof Koss, Emma Dumain   09/29/21  
Carbon pricing is back in the climate change conversation, but House and Senate Democrats are at odds about the policy as reconciliation talks reach a breaking point. Senate Finance Chair Ron Wyden (D-Ore.) is pushing…
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Doubts shroud climate program

By Evan Halper   09/20/21  
As fire ripped through the Mendocino County hills the summer of 2018, burning a vast expanse of forest and turning buildings to ash, a curious thing was happening at Eddie Ranch, a sprawling property scorched by the…
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OECD boss: Carbon pricing should come through us

By Bjarke Smith-Meyer   09/11/21  
Efforts to price carbon should be elevated to the international level, the head of the Organization for Economic Cooperation and Development told EU finance ministers Saturday.
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Energy Traders See Big Money in Carbon-Emissions Markets

By Sarah Mcfarlane   09/01/21  
Big energy trading houses, long focused on deep, volatile markets such as oil and natural gas, are now bulking up their carbon-trading operations as governments around the world push to expand the market for trading…
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Carbon Tax, Beloved Policy to Fix Climate Change, Is Dead at 47

By Robinson Meyer   07/21/21  
The American carbon tax, an alluringly simple policy once hailed by environmentalists, scholars, and politicians as a cure-all for climate change that, for all its elegance in economic models, could not overcome its enduring unpopularity…
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Democrats Propose a Border Tax Based on Countries’ Greenhouse Gas Emissions

By Lisa Friedman   07/19/21  
Democratic lawmakers on Monday proposed to raise as much as $16 billion annually by imposing a tax on imports from China and other countries that are not significantly reducing the planet-warming pollution that they produce.
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Carbon border taxes are defensible but bring great risks

Carbon prices are the most cost-effective way to fight climate change—but for them to work properly, emissions must be priced everywhere. On July 14th the European Commission unveiled its plan to levy what would, in effect,…
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How digitizing global supply chains will advance the circular economy

By Georgia Sherwin   06/24/21  
For all of the wrong reasons, global trade and supply chain logistics have been front of mind this year. When consumers get what they want, when they want it, they typically don’t ask too many…
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Pacific islands make lonely case for carbon price on shipping

By Joe Lo   06/16/21  
Pacific island nations made the case for a carbon price to tackle shipping’s climate impact at the UN body responsible for seaborne transport on Wednesday, but found only tepid support. At a environmental committee meeting…
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This Is How the Fashion Industry Will Reduce Its Carbon Footprint

By Arielle Crawford   06/14/21  
After yet another confused Earth Week and global climate summit, it’s clear that the U.S. has no idea how to address climate change. Vague, meandering pledges about emissions reductions take the stage, while Instagram has…
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Biden should impose a carbon fee immediately

By James E. Hansen and Daniel M. Galpern   06/01/21  
President Biden has inherited a welter of urgent challenges, which he and his team are confronting with alacrity and skilled professionalism. In this moment, he has an exceptional opportunity to address, as he so aptly…
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How much damage does climate change cause in Colorado?

By Mark Jaffe   05/25/21  
The East Troublesome fire, Colorado’s second largest ever, was sweeping across Grand County forests on Oct. 25, 2020, part of a record-breaking wildfire season that forced evacuations, destroyed homes and took lives. Half a world…
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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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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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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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The Climate Solution Actually Adding Millions of Tons of CO2 Into the Atmosphere

By Lisa Song and James Temple   04/29/21  
Along the coast of Northern California near the Oregon border, the cool, moist air off the Pacific sustains a strip of temperate rainforests. Soaring redwoods and Douglas firs dominate these thick, wet woodlands, creating a…
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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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Opinion: Biden’s climate plan is a risky bet for the planet

Environmentalists have tried many approaches to promote climate-change legislation: a big cap-and-trade proposal; small amendments to must-pass bills; tiny changes to the tax code. Their success has been limited. Now Democrats are trying a new…
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Big Businesses Say They Want a Price on Carbon

By Nick Sobczyk   04/14/21  
Executives from oil companies, utilities and some of the world’s biggest companies are meeting with senators and staff this week to push a carbon-fee-and-dividend proposal.
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Oil, gas industry says it will support carbon pricing

By Steven Mufson and Joshua Partlow   03/26/21  
The American Petroleum Institute, the leading oil and gas lobbying group, on Thursday backed the idea of the government putting a price on carbon emissions, provided the Biden administration avoids other measures the group terms…
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Breakingviews – Breakdown: Carbon border tax isn’t about carbon

By Gina Chon   03/23/21  
The idea of a carbon border tax is gaining ground in the European Union and the United States. It looks like a win in the fight against climate change. But such policies could also level…
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U.S. drillers, miners would be out billions if paid climate, health costs: study

By Reuters Staff   03/23/21  
U.S. coal, natural gas and motor fuel producers get implicit benefits worth tens of billion of dollars a year by not having to pay for the damage their products do to the climate and human…
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Oil Company Leaders Support Carbon Pricing Plan

By Timothy Puko   03/22/21  
Top oil company executives, in a meeting with White House officials Monday, expressed support for putting a price on carbon emissions as a means to address greenhouse gas emissions that contribute to climate change. White…
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A New Vision for the US Climate Agenda

By Ian Parry   03/10/21  
Over the next decade, global greenhouse gas emissions need to be cut by 25– 50 percent to be on track for meeting the 2015 Paris Agreement goal of containing global warming to 1.5–2°C.The United States…
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12 states sue Biden over ‘social cost’ calculation of greenhouse gases

By Rachel Frazin   03/08/21  
Twelve states are suing the Biden administration for trying to establish a "social cost" of greenhouse gases to use in agency rulemaking. In a lawsuit filed on Monday, the states argued that a January executive…
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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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Top oil and gas lobbying group close to backing a carbon tax

By Steven Mufson   03/03/21  
The American Petroleum Institute, the oil and gas industry’s top lobbying arm, is edging closer to endorsing a carbon tax, a tool that would make fossil fuels more expensive, boost prospects for renewable and nuclear…
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Oil Trade Group Is Poised to Endorse Carbon Pricing

By Ted Mann and Timothy Puko   03/01/21  
The oil industry’s top lobbying group is preparing to endorse setting a price on carbon emissions in what would be the strongest signal yet that oil and gas producers are ready to accept government efforts…
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