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The Future of US Carbon-Pricing Policy

In: Economics of Environment, Climate Change, and Wine Selected Papers of Robert N Stavins Volume 3 (2011–2023)

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  • Robert N. Stavins

Abstract

In this chapter, I will compare the two major approaches to carbon pricing — carbon taxes and cap-and-trade — in the context of a possible future US climate policy, and to do so by treating both instruments in a balanced manner, examining their merits and challenges, without necessarily favoring one or the other. I try to follow the principle that when making normative comparisons of policy instruments, it is most valuable to compare either idealized versions of two instruments or realistic (likely to be implemented) versions of both, thereby avoiding a comparison of an idealized version of one instrument with a less-than-ideal but realistic version of another (Hahn and Stavins, 1992)…

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  • Robert N. Stavins, 2025. "The Future of US Carbon-Pricing Policy," World Scientific Book Chapters, in: Economics of Environment, Climate Change, and Wine Selected Papers of Robert N Stavins Volume 3 (2011–2023), chapter 11, pages 299-365, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789811292415_0011
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    2. Kumar, Surender & Managi, Shunsuke & Jain, Rakesh Kumar, 2020. "CO2 mitigation policy for Indian thermal power sector: Potential gains from emission trading," Energy Economics, Elsevier, vol. 86(C).
    3. Muryani Muryani & Khoirun Nisa’ & Miguel Angel Esquivias & Siti Hafsah Zulkarnain, 2023. "Strategies to Control Industrial Emissions: An Analytical Network Process Approach in East Java, Indonesia," Sustainability, MDPI, vol. 15(10), pages 1-17, May.
    4. Landry, Joel R., 2021. "The political allocation of green pork and its implications for federal climate policy," Journal of Public Economics, Elsevier, vol. 201(C).
    5. Tao, Miaomiao & Tiwari, Aviral Kumar & Poletti, Stephen & Roubaud, David & Silva, Emilson, 2025. "The credibility of environmental policy stringency: Implications for sustainability in OECD Countries," Energy Economics, Elsevier, vol. 146(C).
    6. Joxe Mari Barrutiabengoa & Rodolfo Méndez-Marcano & Julián Cubero, 2021. "Global | Indicador internacional de intensidad de emisiones GEI desde la producción [Global | Output-side GHG Emission Intensity: A consistent international indicator]," Working Papers 21/02, BBVA Bank, Economic Research Department.
    7. Hammerle, Mara & Best, Rohan & Crosby, Paul, 2021. "Public acceptance of carbon taxes in Australia," Energy Economics, Elsevier, vol. 101(C).
    8. Dardati, Evangelina & Saygili, Meryem, 2020. "Aggregate impacts of cap-and-trade programs with heterogeneous firms," Energy Economics, Elsevier, vol. 92(C).
    9. Goulder, Lawrence H. & Long, Xianling & Lu, Jieyi & Morgenstern, Richard D., 2020. "China’s Unconventional Nationwide CO₂ Emissions Trading System: The Wide-Ranging Impacts of an Implicit Output Subsidy," RFF Working Paper Series 20-02, Resources for the Future.
    10. Mideksa, Torben K., 2024. "Pricing for a cooler planet: An empirical analysis of the effect of taxing carbon," Journal of Environmental Economics and Management, Elsevier, vol. 127(C).
    11. Gollier, Christian, 2024. "The cost-efficiency carbon pricing puzzle," Journal of Environmental Economics and Management, Elsevier, vol. 128(C).
    12. Annicchiarico, Barbara & Di Dio, Fabio & Diluiso, Francesca, 2024. "Climate actions, market beliefs, and monetary policy," Journal of Economic Behavior & Organization, Elsevier, vol. 218(C), pages 176-208.
    13. Lasse Fridstrøm, 2021. "The Norwegian Vehicle Electrification Policy and Its Implicit Price of Carbon," Sustainability, MDPI, vol. 13(3), pages 1-14, January.
    14. Goulder, Lawrence H. & Long, Xianling & Lu, Jieyi & Morgenstern, Richard D., 2022. "China's unconventional nationwide CO2 emissions trading system: Cost-effectiveness and distributional impacts," Journal of Environmental Economics and Management, Elsevier, vol. 111(C).
    15. Ewald, Jens & Sterner, Thomas & Sterner, Erik, 2022. "Understanding the resistance to carbon taxes: Drivers and barriers among the general public and fuel-tax protesters," Resource and Energy Economics, Elsevier, vol. 70(C).
    16. Mireille Chiroleu-Assouline, 2022. "Rendre acceptable la nécessaire taxation du carbone. Quelles pistes pour la France ?," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(1), pages 15-53.
    17. Christian Gollier, 2024. "The cost-efficiency carbon pricing puzzle," Post-Print hal-04938709, HAL.
    18. Barbara Annicchiarico & Marco Carli & Francesca Diluiso, 2022. "Climate Policies, Macroprudential Regulation, and the Welfare Cost of Business Cycles," CEIS Research Paper 543, Tor Vergata University, CEIS, revised 31 Oct 2022.
    19. Karp, Larry & Traeger, Christian, 2024. "Taxes versus quantities reassessed," Journal of Environmental Economics and Management, Elsevier, vol. 125(C).
    20. Starr, Jared & Nicolson, Craig & Ash, Michael & Markowitz, Ezra M. & Moran, Daniel, 2023. "Assessing U.S. consumers' carbon footprints reveals outsized impact of the top 1%," Ecological Economics, Elsevier, vol. 205(C).
    21. Jihad C. Elnaboulsi & Wassim Daher & Yiğit Sağlam, 2023. "Environmental taxation, information precision, and information sharing," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 25(2), pages 301-341, April.
    22. Blanco, Christian C. & Caro, Felipe & Corbett, Charles J., 2020. "Do carbon abatement opportunities become less profitable over time? A global firm-level perspective using CDP data," Energy Policy, Elsevier, vol. 138(C).

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    JEL classification:

    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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