From Waxman-Markey days (2009):
Rob Stavins strongly reinforces my view that the incentive-based climate policy comparison is not as simple as carbon tax advocates promote (Cap-and-trade vs the alternatives):
The Hamilton Project staff concluded in an overview paper (which I highly recommend) that a well-designed carbon tax and a well-designed cap-and-trade system would have similar economic effects. Hence, they said, the two primary questions to use in deciding between them should be: which is more politically feasible; and which is more likely to be well-designed?
The answer to the first question is obvious; and I have argued here that given real-world political forces, the answer to the second question also favors cap-and-trade. In other words, it is important to identify and design policy that will be “optimal in Washington,” not just from the perspective of Cambridge, New Haven, or Berkeley.
In “policy heaven,” the optimal instrument to address climate-change emissions may well be a carbon tax (largely because of its simplicity), but in the real world in which policy is developed and implemented, cap-and-trade is the best approach if one is serious about addressing the threat of climate change with meaningful, effective, and cost-effective policies.
Read the whole post, but my take away is that Stavins believes a carbon tax would be environmentally ineffective as a result of exclusion of important sectors of the economy and taxing carbon at too low of a rate.
via www.env-econ.net
This still strongly influences my thinking in 2015.
