Near term carbon tax policy in the US Economy: limits to deep decarbonization

Abstract

This paper explores carbon dioxide (CO 2 ) tax policies from 2015 to 2030 in the United States economy using an energy system least-cost optimization model. We report limited near-term decarbonization opportunities outside of the electricity sector, which results in substantial CO 2 tax revenue through 2030. Second, because the social cost of carbon is uncertain, we find asymmetric deadweight loss from implementing mistakenly high or low CO 2 taxes, providing efficiency-based support for the precautionary principle. Third, despite CO 2 reductions occurring mainly in the electric sector, the abatement estimated herein is consistent with the US nationally determined contributions established under the Paris