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Five myths about carbon pricing

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  • Gilbert E Metcalf

Abstract

While carbon pricing, in general, and carbon taxes, in particular, are popular with economists, they are subject to considerable misunderstanding among policy-makers and the public. In this paper I consider and refute five myths about carnbon taxes: (i) that a carbon price will hurt economic growth; (ii) that carbon pricing will kill jobs; (iii) that a carbon tax and cap-and-trade programme have the same economic impacts; (iv) that we can’t achieve carbon reduction targets with a carbon tax; and (v) that carbon pricing is regressive. I then discuss implications for policy-making.

Suggested Citation

  • Gilbert E Metcalf, 2023. "Five myths about carbon pricing," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 39(4), pages 680-693.
    • Handle: RePEc:oup:oxford:v:39:y:2023:i:4:p:680-693.
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    File URL: http://hdl.handle.net/10.1093/oxrep/grad042
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    Keywords

    climate change; carbon pricing; carbon tax; distribution; economic growth;
    All these keywords.

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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