U.S. Carbon Price 2014

Overview

Question: How could a national price on carbon be implemented in the United States?
Submit proposals:  https://www.climatecolab.org/plans/-/plans/contestId/1300404
Deadline:  July 20, 2014, at 11:59:59 PM U.S. Eastern Time
Rules:  All entrants must agree to the 2014 Contest Rules.

Prizes: Judges Choice and Popular Choice winners will be connected with and able to present to people who can support the implementation of their proposal, which may include policy makers, economists, business executives, NGO and foundation officials, scientists, and others.  They will be recognized and publicized by the MIT Climate CoLab and invited to showcase their proposals at a conference held at MIT fall 2014, where a $10,000 Grand Prize will be awarded. See 2013 conference.

Related 2014 contests:   U.S. Federal Agencies

 

Guidelines from Advisors and Fellows

This contest asks entrants for novel policies, new mobilization strategies, or combinations of the two that could lead the US to legally enact a price on carbon and other greenhouse gases, whether through Congress at the federal level or another legal body at the state or regional level.

On July 11, 2014, the contest Advisors held a public webinar on this topic, which can be viewed below:

Opportunity/Challenge

Successful legislation placing a price on carbon emissions in the U.S. would have two clear climate benefits:

1. Reduction of future U.S. emissions to help combat climate change
2. Increased likelihood of an international agreement on emission reductions

Reduction of future U.S. emissions

To address global climate change, the U.S. will need to reduce its emissions, alongside other countries. This can be done by reducing the carbon intensity of the energy system and by increasing energy efficiencies. A price on carbon, or support of a carbon-related free-enterprise solution,[1]  can align the signals to encourage these changes across the U.S. economy. A growing number of countries and regions, from the European Union to China to South Korea to Australia, have enacted significant carbon pricing reforms over the past decade. The revenue raised from carbon pricing could be used to reduce other kinds of taxes, as a rebate for citizens, to support research on new low-carbon technologies, or for another purpose.

Increased likelihood of an international agreement on emission reductions

Enactment of carbon pricing in the U.S. or support of a carbon-related free-enterprise solution[2]  could also increase the likelihood of the global community reaching an international climate agreement. For example, after President Obama announced his Administration’s climate strategy in 2013 (an incremental step which experts agree will have less impact than even a modest carbon price), UN Framework Convention on Climate Change (UNFCCC) Executive Secretary Christiana Figueres issued a statement that said “When the United States leads action, it also encourages more rapid international efforts to combat climate change by strengthening political trust, building business momentum and driving new technology solutions.”

Policy Instruments

Carbon pricing shifts the incentive of greenhouse gas emissions by increasing the cost of carbon pollution. Policymakers have debated the most effective instrument to implement a carbon price. Two of the most prominent suggestions have been carbon taxes and emissions trading.  Carbon taxes directly increase the cost of carbon pollution by taxing emissions-intensive activities on the basis of their carbon intensity. Emissions trading schemes set an economy-wide cap on total allowed carbon emissions and create a pool of pollution permits equal to this cap. Economic actors must acquire sufficient pollution permits each year to cover their emissions levels. Over time, the cap level is reduced.

Other policy instruments can also shape the price of producing carbon pollution. For example, direct regulation can change the incentive of greenhouse gases emissions through environmental performance standards. Alternatively, the relative cost of investing in emissions-intensive technologies can be increased through support for investment in renewable energy and other low-emissions technologies. 

Carbon pricing policies can be legislated as stand-alone policies or can be embedded within broader economic or social policy reform packages. Policies can also differ in the price they impose on carbon pollution, in the economic actors who are exposed to this price, and in the institutions necessary to coordinate the price. These policies could happen at the federal scale, through Congress, regionally or on a state-by-state basis.

Mobilization Strategies

Climate change has become an increasingly politicized issue within the U.S. political system; generating support in the U.S. to pass a form of carbon pricing will require a political mobilization strategy. Political mobilization around carbon pricing could take a variety of forms. Support might be cultivated amongst political elites (e.g. through direct engagement with elected representatives during a Congressional session), through strategic engagement during Congressional or other elections, or through shaping the policy preferences of a particular political party. Alternately, political mobilization strategies might focus on large-scale public mobilization and/or the nurturing of a grassroots social and political movement to generate support for policy enactment at the federal, state, regional or local level. Many creative possibilities exist.

Proposal Guidelines

This contest asks entrants for novel policies, new mobilization strategies, or combinations of the two that could lead Congress, states or regions to successfully enact legislation that places a price on carbon emissions and/or other greenhouse gases.  Top proposals will discuss the relationship between policy proposals and the political mobilization strategy necessary to support a policy’s enactment. Contestants should pay particular attention to the specifics of how policy design can facilitate or hinder the political viability of that policy. Proposals should also include ideas for how the revenues raised from the price on carbon would be used.

 

Resources for Proposal Authors

Contest photo source: The Energy Collective