Achieving U.S. Emissions Targets with a Carbon Tax

The document proposes a two-step emissions target mechanism—periodic evaluation and triggered policy changes—to ensure a U.S. carbon tax meets national GHG goals. It suggests four types of trigger responses: automatic tax rate adjustments, increased government spending for emissions reduction, activating 'back-stop' regulations, or streamlined legislative modification. Additionally, it identifies three categories of complementary policies to enhance cost-effectiveness: support for low-carbon innovation (RDD&D), consumer energy savings incentives, and policies targeting 'uncovered' emissions or non-climate co-benefits.

• To ensure national emissions targets are met despite the unpredictability of producer and consumer responses, policymakers can implement a two-step emissions target mechanism consisting of a periodic evaluation of GHG levels against benchmarks and a subsequent policy change if emissions are deemed too high.
• There are four primary categories of policy changes that can be triggered when emissions exceed benchmarks: automatic increases to carbon tax rates, using excess tax revenue to fund emissions-reducing activities (such as capturing methane leaks), activating a 'back-stop' regulation like a national cap-and-trade program, or using a streamlined process for legislative revision based on new data.
• Switzerland provides a real-world example of an automatic tax adjustment; because 2016 emissions exceeded a benchmark of 73 percent of 1990 levels, the carbon tax rate was set to increase from $87 to $100 per metric ton in 2018.
• A carbon tax is most cost-effective when paired with complementary policies that address market failures, such as government-sponsored research, development, demonstration, and deployment (RDD&D) for emerging low-carbon technologies to overcome private sector underinvestment.
• Complementary policies for consumer energy savings are necessary because price signals from a carbon tax alone are often insufficient to overcome barriers like lack of information or investment means; examples include federal appliance standards, state-level utility mandates, and local home energy audits in cities like Austin, Texas.
• Certain emissions sources, such as methane leaks from fossil fuel systems, may be better addressed through alternative policies rather than a carbon tax due to high administrative burdens and difficulties in verification; for instance, the EPA issued performance standards for oil and gas producers in 2016 to address this.

APA

World Resources Institute (n.d.). Achieving U.S. Emissions Targets with a Carbon Tax. https://www.wri.org/research/achieving-us-emissions-targets-carbon-tax

Chicago

World Resources Institute. Achieving U.S. Emissions Targets with a Carbon Tax. n.d. https://www.wri.org/research/achieving-us-emissions-targets-carbon-tax.

Wikipedia

{{cite report |author=World Resources Institute |title=Achieving U.S. Emissions Targets with a Carbon Tax |url=https://www.wri.org/research/achieving-us-emissions-targets-carbon-tax |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{worldresourcesinstitutendachieving, author = {{World Resources Institute}}, title = {{Achieving U.S. Emissions Targets with a Carbon Tax}}, institution = {World Resources Institute}, url = {https://www.wri.org/research/achieving-us-emissions-targets-carbon-tax}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }