A new peer-reviewed paper cuts against the grain by concluding that the most effective carbon tax structure should start high and decline over time.
Why it matters: It breaks with carbon tax bills floating around Congress and other proposals that begin modestly and then escalate.
What they found: The paper in the Proceedings of the National Academy of Sciences journal offers several reasons for flipping the script.
- Uncertainty around just how bad damage from climate change could be makes strong near-term steps vital.
- The high costs of delaying action.
- Falling costs of cutting emissions over time as technology improves.
The big picture: The paper's modeling suggests an optimal price would begin at well over $100-per-ton (or even much higher), rise for a few years, and then fall.
Where it stands: It's very different than what's out there now.
- The nonprofit Climate Leadership Council, which includes Big Oil backers, is circulating a plan that starts at $40-per-ton of CO2 and rises annually.
- A Columbia University energy think tank has a helpful tally of Capitol Hill plans that all start with far lower CO2 prices than the PNAS paper suggests.
But, but, but: "Treat carbon in the atmosphere like an asset (with negative payoffs) and apply Financial Economics 101, and its price appears to jump by quite a bit over typically modeled prices," PNAS co-author Gernot Wagner tells me.
Go deeper: Carbon tax campaign unveils new details and backers
