1 January 2011

Finding common ground in the debate between carbon tax and cap-and-trade policies

Rachel Cleetus

Rachel Cleetus is an economist with the Union of Concerned Scientist’s Climate and Energy Program. Her work includes designing and advocating for strong state, federal, and international policies...

Swift and deep reductions in emissions of greenhouse gases, chiefly carbon dioxide, are necessary to help avoid some of the most devastating effects of climate change. One aspect of US climate policy that is particularly contentious is the issue of the best economic tool to employ to reduce emissions: a carbon tax or a cap-and-trade system. This unnecessarily polarized debate has damaged the effectiveness of climate policy supporters in securing climate legislation. The logical way forward is a hybrid of the two policies—an approach incorporated in some of the recent climate bills, though it was not properly explained or highlighted. This approach would be a practical starting point when the United States next takes up a climate bill, the author writes.