Yesterday the Christian Science Monitor posed several questions about what it calls “everyone’s favorite climate fix,” a carbon tax, including:
Can it work? According to experts at RFF:
“Experts generally agree that how the tax is designed and how revenues are used will be the largest determinants of the effects of the tax on the economy. A carbon tax would increase the cost of fossil fuels, encouraging companies to switch to currently more expensive (albeit cleaner) fuels and leading households and companies to reduce energy use. These factors could make the economy less dependent on fossil fuels and thus less likely to be hurt by energy price shocks.” Read more.
“Because the U.S. emits significantly more CO2 than most other countries, reducing U.S. emissions can contribute to reducing total global emissions. However, imposing a carbon tax or other policy to reduce emissions in one country can lead to increased emissions elsewhere—a phenomenon known as carbon leakage.” Read more.
Exactly how much should carbon cost? According to experts at RFF:
“There are several approaches that Congress might consider when setting a carbon tax rate: using the real cost of emissions, setting a price designed to achieve a revenue goal, or setting a price to achieve an emissions target. The most common approach discussed by experts is to set a tax equal to the real cost of emissions, basing the price on the global environmental damages from emissions, or the ‘social cost of carbon.’ … a recent study by experts at Resources for the Future and the National Energy Policy Institute suggests that a carbon tax reaching about $30 per ton of CO2 by 2020 would be needed to reduce domestic, energy-related CO2 emissions by approximately 10 percent.” Read more.
More research can be found at www.rff.org/carbontax.
RFF on the Issues connects today’s pressing news with related research and expertise at RFF.
