The Case for a U.S. Carbon Tax


Aldy, J. E. (2013). The Case for a U.S. Carbon Tax. Oxford Energy Forum , 91, 13-16.
Full Paper.pdf132 KB

Date Published:

Feb 2013


Every aspect of economic activity a%ects greenhouse gas emissions and, hence, the global climate. Since individuals and businesses bear virtually no cost for emitting greenhouse gases in the absence of public policy, and thus have no incentive to reduce these emissions, the government has a strong case for climate change policy. US policymakers may choose among three general approaches to drive more climate-friendly economic activity: (1) subsidise businesses and individuals to invest in and use lower-emitting goods and services; (2) mandate businesses and individuals to change their behaviour regarding technology choice and emissions; or (3) price the greenhouse gas externality, so that decisions take account of this external cost. Let’s consider these options in turn.

Last updated on 07/19/2016