How is the U.S. Pricing Carbon? How Could We Price Carbon?

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2022-11-22

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Aldy, J., Burtraw, D., Fischer, C., Fowlie, M., Williams, R., & Cropper, M. (2022). How is the U.S. Pricing Carbon? How Could We Price Carbon? Journal of Benefit-Cost Analysis, 13(3), 310-334.

Abstract

Economists have for decades recommended that carbon dioxide and other greenhouse gases be taxed – or otherwise priced – to provide incentives for their reduction. The USA does not have a federal carbon tax; however, many state and federal programs to reduce carbon emissions effectively price carbon – for example, through cap-and-trade systems or regulations. There are also programs that subsidize reductions in carbon emissions. At the 2022 meetings of the American Economic Association, the Society for Benefit-Cost Analysis brought together five well-known economists – Joe Aldy, Dallas Burtraw, Carolyn Fischer, Meredith Fowlie, and Rob Williams – to discuss how the USA does, in fact, price carbon and how it could price carbon. Maureen Cropper chaired the panel. This paper summarizes their remarks.

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