Economists have tended to view emissions pricing (e.g., cap and trade or a carbon tax) as the most cost-effective approach to reducing greenhouse gas emissions. This paper offers a different view. Employing analytical and numerically solved general equilibrium models, the paper indicates plausible conditions under which a more conventional form of regulation—namely, the use of a clean energy standard (CES)—is more cost-effective. The models reveal that in a realistic economy with prior taxes on factors of production, the CES distorts factor markets less because it is a smaller implicit tax on factors. This advantage more than offsets the disadvantages of the CES when relatively minor reductions in emissions are called for. Numerical simulations indicate that the cost-effectiveness of the CES is sensitive to what is deemed “clean” electricity. To achieve maximal cost-effectiveness, the CES must offer significant credit to electricity generated from natural gas.
Press Release — Apr 1, 2020
Major New Study Charts Course to Net Zero Industrial Emissions
Interdisciplinary team assesses technology and policy strategies for industrial decarbonization
Working Paper — Mar 31, 2020
Have US Fuel Economy and Greenhouse Gas Emissions Standards Improved Social Welfare?
This paper provides the first comprehensive social welfare estimates of recent fuel economy and greenhouse gas emissions standards.
Journal Article — Mar 29, 2020
Technologies and Policies to Decarbonize Global Industry: Review and Assessment of Mitigation Drivers through 2070
Fully decarbonizing global industry is essential to achieving climate stabilization, and reaching net zero greenhouse gas emissions by 2050–2070 is necessary to limit global warming to 2 °C. This paper assembles and evaluates technical and policy interventions, both on the supply side and on the demand side.