Climate policy in 2025: the importance of a carbon fee
In this paper, Bistline et al. put forth potential climate policy options facing the U.S. federal government in 2025 and their associated tradeoffs. For their analysis, they use EPRI’s U.S. Regional Economy, Greenhouse Gas, and Energy (US-REGEN) model to project potential emissions reductions, fiscal impacts, and effects on household energy and fuel expenditures. Their findings include:
- The emissions reductions of IRA’s climate and energy provisions can be significantly amplified under scenarios that include a modest carbon fee or, to a lesser extent, a Clean Electricity Standard (CES) in the power sector.
- Net fiscal costs can be substantially reduced in scenarios that include a carbon fee.
- Expanding the IRA tax credits yields modest additional emissions reductions at a significant fiscal cost.
- None of the policy combinations analyzed in this paper achieves the U.S. target of a 50-52% economy-wide emissions reduction from 2005 to 2030. However, the authors assume that the carbon fee and CES scenarios could be instrumental in achieving these levels between 2030 and 2035.
Climate Policy Reform Options in 2025
Authors: John E. Bistline, Kimberly A. Clausing, Neil Mehrotra, James H. Stock, Catherine Wolfram
From: Stanford University, UCLA School of Law, Federal Reserve Bank of Minneapolis, Harvard University, MIT
Obstacles in implementing climate policies
In this paper, Burgess et al. discuss the challenges and implications of recent US climate policies, focusing on supply, demand, and polarization issues. The United States has passed significant laws to reduce greenhouse gas emissions, with analyses suggesting a potential reduction of over 40% below 2005 levels by 2030. However, the successful implementation of these laws faces obstacles such as:
- Resistance to Infrastructure Expansion: This obstacle pertains to difficulties in expanding infrastructure necessary for the energy transition. It includes challenges related to permitting barriers, regulatory complexities, and the time-consuming nature of obtaining approvals for projects like electricity transmission and renewable energy installations. Resistance to infrastructure expansion can lead to delays in implementing key projects critical for reducing greenhouse gas emissions.
- Changing Consumer Behavior: This obstacle highlights the need for consumers to adapt their behaviors in response to new incentives and policies aimed at promoting sustainability. Encouraging consumers to adopt low-carbon technologies like electric vehicles, heat pumps, and solar energy systems requires overcoming barriers such as upfront costs, lack of awareness, and ingrained habits.
- Political Processes at Various Levels: This obstacle refers to the challenges associated with enacting and sustaining climate policies across different levels of government, including municipal, state, and federal levels. Political polarization, potential repeals of laws, and funding uncertainties can impede the effective implementation of climate policies. Overcoming political obstacles is essential for ensuring the continuity and success of initiatives aimed at combating climate change.
Supply, demand and polarization challenges facing US climate policies
Authors: Matthew G. Burgess, Leaf Van Boven, Gernot Wagner, Gabrielle Wong-Parodi, Kyri Baker, Maxwell Boykoff, Benjamin A. Converse, Lisa Dilling, Jonathan M. Gilligan, Yoel Inbar, Ezra Markowitz, Jonathan D. Moyer, Peter Newton, Kaitlin T. Raimi, Trisha Shrum, Michael P. Vandenbergh
From: University of Colorado, Boulder, Columbia University, Stanford University, University of Virginia, Vanderbilt University, University of Toronto Scarborough, University of Massachusetts, Amherst, University of Denver, University of Michigan, University of Vermont
Photo Illustration: Climate XChange
