In a parsimonious two-sector general equilibrium model, we challenge the widely-held tenet that within a cap-and-trade system renewable energy policies have no effect on carbon emissions. If the cap does not capture all sectors, we demonstrate that variations of a renewable energy subsidy change...

Whether or not the federal government should price carbon continues to be debated. There were several scholarly pieces examining the relative advantages and disadvantages of cap and trade v. a carbon tax at the time of Congressional Debate on the American Clean Energy and Security Act in 2010....

Since the Kyoto Protocol, black carbon and other non-gaseous short lived climate pollutants (SLCPs) have played little role in global climate policy making. Over the past ten years, however, there has been an increasing recognition in the climate science literature of their importance for the...

This essay revisits the question of instrument choice for the regulation of externalities in the context of climate change. The central point is that the Pigouvian prescription to equate marginal control costs with the expected marginal benefits of damage reduction should guide the design of...

When it was launched in 2005, the European Union emissions trading system (EU ETS) was projected to have prices of around €30/ton CO2 and to be a cornerstone of the EU's climate policy. The reality was a cascade of falling prices, a ballooning privately held emissions bank, and a decade of low...

With the United States’ reentry to the Paris Agreement, there is now consensus among the world's largest carbon emitters that emissions must be reduced. But there is still a radical lack of consensus on what regulations should be chosen to reduce carbon. Worse, there is also a radical...

Parties to the United Nations Framework Convention on Climate Change (UNFCCC) have been engaged in discussions on the future of the climate change regime. While the principle of “common but differentiated responsibilities” has so far played a central role in defining rights and...

In 2020, the European Commission announced its intention to table a legislative proposal for a Carbon Border Adjustment Mechanism (CBAM), as part of a wider package of laws aimed at implementing the EU Green Deal. It furthermore stated that it would explore various options, such as a so-called...

We examine the impact of a unilateral carbon tax in developed countries focusing on the expected size of carbon leakage (an increase in emissions in non-taxing regions as a result of the tax) and the effects on leakage of border tax adjustments. We start by analyzing the problem using a simple...

We examine the impact of a unilateral carbon tax in developed countries focusing on the expected size of carbon leakage (an increase in emissions in non-taxing regions as a result of the tax) and the effects on leakage of border tax adjustments. We start by analyzing the problem using a simple...