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Is a carbon tax the right policy instrument for a Green transition ?

David Spence
Joined: 2 years ago
Posts: 10
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Putting aside the unpopularity of taxes for a moment, there seems to be growing division among proponents of a green transition over the effectiveness of carbon taxes as a policy instrument to reduce carbon emissions quickly. Some modeling seems to imply that even modest carbon taxes would lead to the rapid demise of coal fired power plants, and improve the economics of utility scale renewables in the electric grid (by improving their competitive position vis-à-vis natural gas-fired power). On the other hand, some of the carbon tax proposals floated by Republicans and conservatives seem laden with conditions that make proponents of a green transition suspicious (e.g., elimination of Clean Air Act authority to regulate carbon emissions).

Mandates like renewable portfolio standards seem to offer more security to proponents of a green transition. On the other hand, taxing emissions has the benefit of focusing on the problem, which is emissions, not fuels. What combination of policy instruments do you think is likely to be most effective?

Or is this a purely academic question because if the unpopularity of taxes?