Carbon Taxes have a multiplier effect on clean energy policies

It all begins with an idea.President Biden’s Build Back Better package has already had to be cut back drastically. The climate aspect is to halve the U.S.’s greenhouse gas pollution from its peak by 2030. Given the limitations on what Biden can do, will tax credits alone (favouring low-carbon solutions) achieve the target, asks Meredith Fowlie at the Energy Institute at Haas. She reviews papers that say it almost certainly won’t. However, the addition of a modest $20/tonne carbon tax probably will. That’s because without a carbon tax fossil fuels stay competitive.