Emissions Projections under Alternative Climate Policy Proposals

Resources for the Future (RFF) staff utilized a suite of models to estimate the projected energy-related carbon dioxide emissions reductions under different climate policy proposals, including alternative carbon fee scenarios.The first scenario includes tax incentives for renewable energy, energy storage, energy efficiency, and clean light-, medium-, and heavy-duty vehicles (similar to the Clean Energy for America Act, CEAA) AND clean electricity targets embodied in grants to retail electricity service entities (similar to the goals embodied in the Clean Electricity Performance Program, CEPP) set at $150/MWh for the first year of operation. [1]The second set of scenarios includes the “central case” carbon fee scenario in which an economy-wide fee on emissions is set at $15 per metric ton CO2 beginning in 2023, rising to $30 in 2028, and increasing at $10 per year (above inflation) through 2040. We show results for this scenario for multiple policy cases:With and without an exemption for gasoline; andWith and without an exemption for gasoline in addition to CEAA and CEPP-type programsThe third scenario is an alternative economy-wide carbon fee that starts at $15 in 2023 and increases 5 percent annually (above inflation), without exemptions and without additional policies.Details on all major modeling assumptions are included in the RFF Issue Brief “Emissions Projections for a Trio of Federal Climate Policies.” [2]Figure 1 displays the two price path scenarios. By 2040, under the central case scenario, the carbon fee is $150 (in 2023$) whereas in the alternative carbon fee scenario, the fee is $34 in 2040.