Tag: Carbon price

However, compelling ideas from economics do not necessarily suspend the laws of politics. Since the 1997 Kyoto agreement, the rate of non-symbolic carbon price adoption has been rather modest. And carbon taxes and cap-and-trade are among the most likely climate policies to be reversed after they have been launched. In the United States, the political path forward is challenging at best. Even after last year’s multi-state declaration of fealty to meeting Paris emission reduction goals with aggressive bottom-up innovation, the actual adoption of state carbon pricing policies remains quite modest and confined to coastal states. But there are important success stories to consider, cases where carbon pricing has not only been adopted but sustained through subsequent election cycles while delivering on some of its performance goals. There is no one singular formula that has guided this modest set of success cases and can easily be applied to fix the political challenges linked to carbon pricing. But all of them were guided by political leaders who found credible ways to link the imposition of price increases with immediate and tangible benefits through allocation of revenue generated by the policy. These benefits have included reductions in other taxes, electricity bill rebates, and investment in energy transition, all presented to citizens in clear and persuasive ways. So break out the champagne for William Nordhaus and scores of other economists who have placed this intriguing idea into global, national, and sub-national climate policy debate in past decades.