Media references to putting a “price on carbon” to address the climate crisis are on the increase recently. Doing so – either by putting a carbon tax on fossil fuels or by implementing a “cap and trade” system, also known as an emissions trading system – would result in higher prices for fossil fuel-based goods and services, which would provide us with a financial incentive to reduce our carbon footprints, and provide entrepreneurs with an incentive to develop less carbon-intensive products.

Depending on the pricing design, the result could be a dramatic reduction in carbon emissions, and if the resulting revenues were returned to American households, most low- to moderate-income households would come out ahead financially.

(Copyright © 2021 APG Media)

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