PUTTING A PRICE ON CARBON: REDUCING EMISSIONS

The document examines how a national carbon price would induce emissions reductions across the U.S. economy, with the most immediate and significant impacts occurring in the electricity sector. It argues that while U.S. Energy Information Administration (EIA) forecasts are conservative, empirical evidence from places like British Columbia suggests that carbon pricing can drive substantial behavioral changes and technological innovation. The authors advocate for a combination of carbon pricing and complementary policies, such as R&D funding and energy-efficiency standards, to overcome market barriers and achieve a target of reducing emissions by more than 80 percent by 2050.

• A national carbon price is presented as a critical tool for the United States to meet its commitment to reduce greenhouse gas emissions by 26 to 28 percent below 2005 levels by 2025 and 83 percent by 2050.
• The electricity sector is the most responsive to carbon pricing in the very short run because grid operators can immediately dispatch lower-carbon generation alternatives as operating costs for high-carbon fuels like coal increase.
• U.S. Energy Information Administration (EIA) forecasts for carbon pricing are characterized as conservative because they primarily account for emissions reductions that are virtually certain and assume minimal technological progress or behavioral response outside the electricity sector.
• Empirical evidence from British Columbia shows that a carbon tax implemented in 2008 led to a 5 to 15 percent decrease in CO2 emissions compared to a no-policy scenario over five years, with gasoline usage declining more than five times larger than expected.
• In the transportation sector, emissions reductions are expected to be more gradual than in the electricity sector due to a lack of cost-effective substitutes and the fact that a carbon price has a smaller relative impact on petroleum prices than on coal prices.
• Carbon pricing encourages long-term technological innovation by increasing the expected return on investments in low-carbon technologies and promoting 'learning-by-doing' productivity gains.
• Complementary policies are necessary to address market barriers that a carbon price alone may not solve, specifically public funding for R&D to address the social return on investment and energy-efficiency standards to overcome informational failures and split incentives.
• While cap-and-trade programs provide more certainty regarding the total level of emissions reductions, carbon taxes provide more price predictability, which can better encourage long-term investment and innovation.

APA

KAUFMAN, N., OBEITER, M., & KRAUSE, E. (n.d.). PUTTING A PRICE ON CARBON: REDUCING EMISSIONS. World Resources Institute. https://wriorg.s3.amazonaws.com/s3fs-public/Putting_a_Price_on_Carbon_Emissions.pdf

Chicago

KAUFMAN, NOAH, MICHAEL OBEITER, and ELEANOR KRAUSE. PUTTING A PRICE ON CARBON: REDUCING EMISSIONS. World Resources Institute, n.d. https://wriorg.s3.amazonaws.com/s3fs-public/Putting_a_Price_on_Carbon_Emissions.pdf.

Wikipedia

{{cite report |last1=KAUFMAN |first1=NOAH |last2=OBEITER |first2=MICHAEL |last3=KRAUSE |first3=ELEANOR |title=PUTTING A PRICE ON CARBON: REDUCING EMISSIONS |publisher=World Resources Institute |url=https://wriorg.s3.amazonaws.com/s3fs-public/Putting_a_Price_on_Carbon_Emissions.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{kaufmanndputting, author = {KAUFMAN, NOAH and OBEITER, MICHAEL and KRAUSE, ELEANOR}, title = {{PUTTING A PRICE ON CARBON: REDUCING EMISSIONS}}, institution = {World Resources Institute}, url = {https://wriorg.s3.amazonaws.com/s3fs-public/Putting_a_Price_on_Carbon_Emissions.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }