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U.S. Carbon Price 2015


Overview


Question: How could a national price on carbon be implemented in the United States?
Submit proposals: https://www.climatecolab.org/web/guest/plans/-/plans/contestId/1301419
Rules: All entrants must agree to the 2015 Contest Rules. and Terms of Use.
Deadline: Saturday, June 13, 11:59 PM Eastern Time
Judging Criteria & Prizes: See below.
 

Background


This contest asks entrants for novel policies, new mobilization strategies, or combinations of the two that could lead the United States 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 May 19, 2015, the Advisors of this contest held a public webinar, which can be viewed here.

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

 

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.

Political 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.

Other Strategies

Last year’s U.S. carbon price contest surfaced a number of innovative proposals that were outside of the political realm.  For example, one of the two Judges’ Choice winners was Sno-Caps, which suggested a voluntary cap-and-trade program conducted using digital currency.  This contest welcomes other strategies on how to successfully implement a price on carbon given the current political, social, economic and technological landscape -- many creative possibilities exist.

Judging Criteria

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.

Judges will be asked to evaluate proposals on the following criteria: feasibility, novelty, impact and presentation quality.  Winning proposals will be especially strong in at least one of the first three dimensions, and also well presented.  For details about the judging criteria, click here.

Prizes

Judges Choice and Popular Choice winners will receive a special invitation to attend selected sessions at MIT’s SOLVE conference and present their proposals before key constituents in a workshop the next day, where a $10,000 Grand Prize will be awarded. A few select Climate CoLab winners will join distinguished SOLVE attendees in a highly collaborative problem-solving session.

Resources for Proposal Authors

Center for Climate and Energy Solutions (C2ES), Carbon Pricing Proposals of the 113th Congress, 2013.

Center for Climate and Energy Solutions (C2ES), What is Cap and Trade?

Congressional Budget Office (CBO), Effects of a Carbon Tax on the Economy and the Environment, Website, 2013

Congressional Budget Office (CBO), Effects of a Carbon Tax on the Economy and the Environment, Report, 2013

European Commission, The EU Emissions Trading System (EU ETS)

Government Accountability Office (GAO), Reducing Greenhouse Gas Emissions

Government Accountability Office (GAO), Climate Change Trade Measures, 2009

EPA's recent proposed Clean Power Plan rules, 2014

George P. Schultz and Gary S. Becker, Why We Support a Revenue-Neutral Carbon Tax, 2013

Intergovernmental Panel on Climate Change, Climate Change 2001, Working Group III: Mitigation

International Energy Agency (IEA), policy strategy section of A Policy Strategy for Carbon Capture and Storage, 2012

Jon A. Krosnick & Bo MacInnis, Does the American Public Support Legislation to Reduce Greenhouse Gas Emissions? Daedalus, Winter 2013.

Pew Center on Global Climate Change, The European Union Emissions Trading Scheme (EU-ETS): Insights and Opportunities Resources for the Future (RFF), Carbon Tax FAQs

Resources for the Future (RFF), Designing by Degrees: Flexibility and Cost-Effectiveness in Climate Policy, 2014

Skeptical Science, The Economical Impacts of Carbon Pricing

United Nations Climate Change Secretariat, UNFCCC Executive Secretary reaction to the Climate Action Plan of US President Barack Obama, June 2013.

Congressional Research Service (CRS), Carbon Tax and Greenhouse Gas Control: Options and Considerations for Congress, 2009

Congressional Research Service (CRS), Carbon Tax: Deficit Reduction and Other Considerations, 2013

Congressional Research Service (CRS), Climate Change Legislation in the 113th Congress, 2013

Congressional Research Service (CRS), Estimating Offset Supply in a Cap-and-Trade Program, 2010

Congressional Research Service (CRS), Market-Based Greenhouse Gas Control: Selected Proposals in the 111th Congress, 2010