ORIGINAL REPORTING: The Challenges Of The Carbon Price Solution

Pricing carbon is vital to US climate goals and politically unlikely but there is another way, analysts say; The new way to think of pricing carbon is as 'a journey, not an endpoint'

Herman K. Trabish, November 24, 2021

Editor’s note: Calls continue for a price on carbon and legislation to get it done remains in limbo.

Imposing a federal price on carbon to drive decarbonization is both urgent and unlikely, but there may be a workaround, according to some economists and policymakers.

One approach to pricing carbon is a direct tax. The other is a market-based cap and trade system in which tradeable allowances for emissions above or below a pre-set cap can be bought and sold. Most economists say either can work. Neither approach has been politically viable for carbon at the national level. But many are beginning to see another approach.

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The federal government could start with the "suite of policies" California used to reach its first emissions reduction goals four years early, California Air Resources Board (CARB) Deputy Executive Officer Rajinder Sahota said. California has a price on carbon now, but its success was built on a "clear regulatory framework of clean energy policies, programs, incentives and strong enforcement."

There are still multiple legislative efforts in Congress to create a federal carbon price, some with bipartisan interest, Sen. Sheldon Whitehouse (D-R.I.) told a Federal Energy Regulatory Commission Sept. 30, 2020, conference. And elimination of the clean energy mandate from the infrastructure bill makes proposed methane and carbon pollution fees in federal legislation "even more critical," he told Utility Dive Oct. 18.

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Sen. Whitehouse's urgency about a price signal for carbon is appropriate, advocates for carbon pricing agreed. But they also agreed with CARB's Sahota that imposing a price is a process and where it is not politically viable, mandates and standards created by policy and regulations can lay the groundwork.

Limited carbon pricing is now reducing emissions in California and in the 11-state Regional Greenhouse Gas Initiative (RGGI). But past and current U.S. federal legislation to price carbon has not advanced… click here for more

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