Duke researchers identify ways to increase emissions certainty under a carbon tax

Here's the conventional wisdom about carbon pricing options: A carbon tax offers greater cost certainty, while cap-and-trade policies offer greater emissions certainty. Policy experts have devoted considerable attention to how to increase cost certainty for cap-and-trade systems. But there has been very little exploration of how to increase emissions certainty under a carbon tax.

Enter a team of Duke experts affiliated with the Nicholas Institute for Environmental Policy Solutions: Brian Murray, Billy Pizer and Christina Reichert. (In addition to their Nicholas Institute affiliations, Brian Murray is also interim director of the Energy Initiative and a Nicholas School of the Environment faculty member, and Billy Pizer is also faculty director of the Energy Initiative's Energy Data Analytics Lab and a faculty member at the Sanford School of Public Policy.)

The three contributed to a Symposium on "Resolving the inherent uncertainty of carbon taxes" published in the Harvard Environmental Law Review this month. An Introduction provides readers with a foundation on the design of carbon tax policy and summarizes the options referenced in Symposium contributors' essays.

The Duke authors' essay discusses 1) the measurement of emissions performance; 2) a taxonomy of mechanisms that could increase emissions certainty, including the challenges and opportunities each poses as well as ideas for initiating them; and 3) areas for additional research. 

Mechanisms examined include changing the tax rate or schedule, using traditional regulatory tools as a backup to the tax, using revenue to pay for additional emission reduction activities, and applying hybrid approaches that combine elements of all three. 

RELEVANT LINKS: 

1. Introduction by Joseph E. Aldy, Marc Hafstead, Gilbert E. Metcalf, Brian C. Murray, William A. Pizer, Christina Reichert and Robertson C. Williams III. 
2. Duke authors' essay: "Increasing emissions certainty under a carbon tax" 
3. Q & A with Brian Murray, Billy Pizer and Christina Reichert