Energy

"Given the existing low-cost competition in a no-growth market, renewable developers face tough investment challenges absent new policies. A carbon tax could substantially increase market demand for renewable power and encourage the retirement of pollution-intensive coal-fired power plants."

The authors examine the effect of real energy prices and a simulated carbon price on production and net imports. They find modest adverse competitiveness effects for energy-intensive industries.

The international agreement on greenhouse gas emissions and climate change to be determined in Paris in December 2015 is “the greatest opportunity the world has had in 20 years to make meaningful progress on this exceptionally challenging issue,” Harvard Project on Climate Agreements (HPCA) Director Robert Stavins said in a Boston Globe op-ed in September. Stavins was in New York City during the week of the United Nations Climate Summit, which included numerous side events and a march that attracted several hundred thousand Americans calling for serious climate actions.

Our proposal for a post-2012 international global climate policy agreement contains three essential elements: meaningful involvement by key industrialized and developing nations; an emphasis on an extended time path of targets; and inclusion of market-based policy instruments. This architecture is consistent with fundamental aspects of the science, economics, and politics of global climate change.

"...[T]he U.S. and China have been involved in intense talks about climate policy. If the two nations come together in a bilateral agreement—a real possibility—they would have much more leverage to persuade other major nations to join. From there, developing nations could be brought on board by giving them targets that reduce emissions without stifling growth. Advanced nations might agree to more-severe emissions cuts and allow developing nations to make gradual cuts in the early decades as they rise toward the world's average per-capita emissions. With the right incentives, developing countries can and will move onto less carbon-intensive growth paths."

"Any serious effort to address anthropogenic climate change will require giving the private sector a financial incentive to reduce emissions. Firms and consumers currently pay nothing to emit carbon dioxide (CO2) and other greenhouse gases. If we want to reduce the harmful effects of such gases on our environment, this free ride for pollution must come to an end...."

Professor Stavins' presentation at the 7th IETA Forum on the State and Development of the Greenhouse Gas Market described tradable permit systems and linkage among them that allows emission reduction efforts to be redistributed across systems. He notes that linkage may become the de jure or de facto post-2012 international policy architecture.