Hot Air Won't Fly: The New Climate Consensus That Carbon Pricing Isn't Cutting It

Exploiting Synergy of Carbon Pricing and Other Policy Instruments for Deep Decarbonization

“…Recently, it has been questioned whether carbon pricing is an efficient and effective tool to foster deep decarbonization, culminating in the claim that carbon pricing actually hinders the achievement of such a transformation. 1,2 This criticism disregards what we believe has been the consensus for many years now, namely that the deep decarbonization of our economies essentially requires a comprehensive and disruptive policy package that includes carbon pricing among other measures, such as technology-specific support schemes. Here, we emphasize that carbon pricing could and should be part of any effective policy mix and that some of the arguments against carbon pricing are flawed.…”

“…A second argument against carbon pricing is that it is ineffective, inter alia, because prices are currently too low. 2 Setting prices higher, however, allegedly would not work because of a lack of social and political acceptance-one of the reasons being that carbon pricing may hit poorer households harder than richer ones. While we agree that distributional impacts of policies matter, we want to emphasize that any decarbonization policy will have distributional impacts, and mostly these are going to affect low-income households particularly, as they spend a larger share of their income on energy, compared to richer households.…”

“…Fifth, the empirical evidence of carbon pricing with respect to short-and longterm impacts on CO 2 emissions is questioned by some. 1,2 We believe it is too early to make any definite statements on carbon pricing in general, although sectoral emission prices have been effective in some cases. 10 Most carbon pricing schemes have been introduced only quite recently, at relatively low price levels, and they often do not address all domestic CO 2 emissions.…”

Exploiting Synergy of Carbon Pricing and other Policy Instruments for Deep Decarbonization

“…Recently, it has been questioned whether carbon pricing is an efficient and effective tool to foster deep decarbonization, culminating in the claim that carbon pricing actually hinders the achievement of such a transformation (Patt and Lilliestam, 2018;Ball, 2018). This criticism disregards what we believe has been the consensus for many years now, namely that the deep decarbonisation of our economies essentially requires a comprehensive and disruptive policy package that includes carbon pricing amongst other measures, such as technology-specific support schemes.…”

“…A second argument against carbon pricing is that it is ineffective, inter alia, because prices are currently too low (Ball, 2018). Setting prices higher, however, allegedly won't work due to a lack of social and political acceptance -one of the reasons being that carbon pricing may hit poorer households more than richer ones.…”