Climate Policy

A new UN video on climate change explains how carbon pricing can help advance a transition to a low-carbon future. The video features an MIT Joint Program/National Renewable Energy Laboratoray (NREL) study in the journal Climate Change Economics showing how a carbon tax can both accelerate reductions in greenhouse gas emissions and be fair and not hurt low-income households.

BOSTON, January 27, 2022—Wellington Management and the Joint Program on the Science and Policy of Global Change at the Massachusetts Institute of Technology today announced the formation of a climate change research collaboration. The alliance will bolster Wellington’s current research on the transition to a low-carbon economy, enhance its understanding of the expected financial impacts of various transition pathways on industries and economies, and deepen its decarbonization engagement practices.

Abstract: Growing societal pressures, technological trends and government and industry actions are moving the world toward decarbonization and away from “business-as-usual.” As such, the concept of a single/obvious “business as usual” or “reference” scenario is no longer relevant. Instead, there are multiple plausible futures that should be explored. We contribute one such scenario that carefully considers emissions-reduction trends and actions that are likely in the future, absent a globally coordinated mitigation effort. We explore the long-term implications for energy, emissions and temperature outcomes if the world continues to address climate change in the way it has so far—through piecemeal actions and growing social and technological pressures.

This Growing Pressures scenario results in a central scenario outcome of about 3°C of surface temperature warming, which is higher than the “well below 2°C” level aspired to by the Paris Agreement, but lower than many widely used “no-policy” scenarios. Ongoing and growing pressures of change, the roots of which are clearly visible today, could deliver a plausible energy transition scenario to near-zero emissions that plays out over the coming century.

While a more aggressive transition is clearly required, this finding highlights the need to bring actions forward in time to achieve an improved outcome making use of clearly identifiable policies and technologies.

Abstract: Distributional impacts of environmental policies have become an increasingly important consideration in policymaking.

To evaluate the distributional impacts of carbon pricing with different revenue recycling schemes for the USA, we integrate a national economic model for the USA with household microdata that provides consumption patterns and other socio-economic characteristics for thousands of households. Using this combined model, we explore the distributional impacts and the possible trade-offs between equity and efficiency of different revenue recycling schemes.

We find that the choice of revenue recycling scheme has a limited effect on efficiency of the policy, but significant distributional impacts. Our analysis indicates that policymakers can mitigate negative distributional impacts with positive synergies on efficiency.

Pages

Subscribe to Climate Policy