Ask an economist how to combat climate change, and you’re likely to get a pretty simple answer: put a price on carbon.
“If you let the economists write the [climate] legislation, it could be quite simple,” MIT business school economist Henry Jacoby told NPR last year, implying that the whole plan to curb greenhouse gas emissions could “fit on one page.”
In short, tax fossil fuels in proportion to the amount of carbon they release. Make coal, oil and natural gas more expensive. “That’s it; that's the whole plan,” as NPR’s David Kestenbaum put it.
Jacoby and MIT Sloan School colleague John Reilly envision a carbon tax sufficient to increase the price of gasoline by 25 cents in the first year, rising to $1.00 per gallon. In rough terms, that’s a tax of $25-100 per ton of CO2.
While many economists admit a slightly more nuanced view (acknowledging the need for “supplemental policies” to address other market failures hampering climate solutions, including innovation spillover risks and infrastructure lock-in) or prefer emissions trading programs instead of taxes, Jacoby and Reilly’s one-page climate plan isn’t far off from the typical economist’s prescription for climate change.