Marc Hafstead and Yunguang Chen:
The election of Donald Trump has cast significant uncertainty over the future of the Paris Agreement to combat global climate change, as the president-elect actively campaigned to pull the United States from the international accord. Under this agreement, which officially went into force in November 2016, the United States (under President Obama’s leadership) pledged to reduce greenhouse gas emissions by 26–28 percent relative to 2005 levels by 2025. Despite his assertion that climate change is a “hoax” created by China, however, Trump has moderated his hardline approach since the election by stating that he would keep an open mind on the agreement.
Should the president-elect choose to pursue policies to meet the US pledge, as urged by over 600 US companies, what options exist to reduce greenhouse gas emissions below projected business-as-usual levels? A regulatory approach through the Clean Air Act is likely out of the question, given Trump’s nomination of Scott Pruitt (a vocal critic of the Clean Power Plan) to lead the US Environmental Protection Agency (EPA). Still, if we assume that EPA’s Clean Power Plan is upheld in the court system or not dismantled by the incoming Trump administration, US emissions in 2025 are projected to be only 14 percent below 2005 levels under current law. Even with additional regulatory measures that have been proposed by the Obama administration ... US emissions levels in 2025 are projected to be only 19 percent below 2005 levels, still well short of the 26–28 percent target.
Yet Trump’s nomination of Rex Tillerson for secretary of state suggests a possible alternative policy approach—a revenue-neutral, economy-wide carbon tax. As CEO of ExxonMobil, Tillerson has publicly backed the idea since 2009. Using the Goulder-Hafstead E3 model, we investigated how such a tax on carbon dioxide emissions from combustion (representing about 75 percent of US greenhouse gas emissions) could be designed to meet the US target at a relatively minimal cost. ...
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