11 essential questions for designing a policy to price carbon

Research Report

11 essential questions for designing a policy to price carbon

July 8, 2016

Abstract

Economists widely advocate establishing a price on carbon as a central means of reducing greenhouse gas emissions and the risks of global climatic disruption and ocean acidification. To be sure, a price on carbon is necessarily one part of a broader climate policy portfolio that includes diplomatic engagement, research, investments in adapting to a changing climate, assistance for vulnerable populations, and other aspects of the challenge. What follows are eleven essential design questions to consider when designing a carbon charge. Each question has several potential answers with their own considerations, pro and con (recognizing that one person’s pro can be another person’s con). To inform your own thoughts on how a price on carbon should work, imagine you are a policymaker and think through how you would address each of the following questions. The goal here is to elucidate at a high level the options for carbon pricing policy design, not to build the case for a carbon price itself or quantify the benefits or costs of specific approaches.

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