The experience of several US states lends credence to the belief that carbon pricing can lower emissions and reduce energy prices without doing economic harm. Some form of carbon pricing scheme has already been adopted by a number of American states as well as countries like China, Japan and 28 European nations. In the European Union carbon pricing has already helped to reduce emissions.
Federal carbon reduction initiatives in the US including a limit on emissions from power producers and China’s coal reductions are helping to build momentum for global action. Now that energy prices are lower this is an ideal time to implement a price on carbon. As reported by the Financial Times, declining energy prices enhance the value of carbon pricing.
Republican opposition in the US, make the prospects of national carbon pricing legislation impossible, however, individual states are getting on-board and polls suggest that Americans support the idea. A 2015 poll found that more than two thirds of Americans support a revenue neutral carbon tax.
In addition to the action of US corporations, individual state governments have assumed a leadership role on carbon pricing. US states that have adopted carbon pricing show that they are able to reduce emissions without undermining growth. California’s cap and trade program has seen the economy grow by 2 percent while cutting emissions of participating companies by 4 percent.
California’s carbon cap-and-trade program “”brings together the best aspects of regulation and using the market to drive flexible mechanisms,” added Stanley Young of the California Environmental Protection Agency’s Air Resources Board (CARB).
As CARB explains on its website, “Market forces spur technological innovation and investments in clean energy. Cap-and-trade is an environmentally effective and economically efficient response to climate change.”
California has now been joined by the Canadian provinces of Quebec and Ontario
Cap and trade in the North East’s nine-state Regional Greenhouse Gas
Initiative, (RGGI) has cut the greenhouse gas emissions of participating
states 2.7 times more than non-RGGI states, while growing their gross
domestic product 2.5 times more than non-RGGI states. In addition, retail
electricity prices across the region have declined by an average of 8
percent.
