For years, economists championed carbon pricing as the most economically efficient way to transition the energy sector to net zero — but that may no longer be the case.

According to a new NBER working paper, carbon pricing policies such as carbon taxes and cap-and-trade programs may not be better than other options.

Using 2019 data to model the U.S. electricity grid, researchers found that energy intensity standards and clean energy subsidies may be just as efficient as carbon pricing policies…

…“I think the real question is: If the goal was to get to the clean electricity grid and then use clean electricity to decarbonize other sectors of the economy… a nice virtue of a subsidy-driven route to decarbonizing the grid is that it actually results in low electricity prices for consumers,” Ryan Kellogg, the paper’s co-author and professor at the University of Chicago Harris School of Public Policy, told Yahoo Finance….

Continue reading at Yahoo Finance…

Areas of Focus: Energy Markets
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Energy Markets
Well-functioning markets are essential for providing access to reliable, affordable energy. EPIC research is uncovering the policies, prices and information needed to help energy markets work efficiently.
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As the electric power system faces new pressures and opportunities, EPIC research is working to identify the mix of policies needed to accelerate the global transition to clean, reliable, affordable...
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Renewable Energy
Lower technology costs and supportive public policies are driving an increase in renewable energy in markets around the world. EPIC research is assessing the costs, benefits, and efficiency of policies...
Climate Change
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Climate Change
Climate change is an urgent global challenge. EPIC research is helping to assess its impacts, quantify its costs, and identify an efficient set of policies to reduce emissions and adapt...
Climate Law & Policy
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Climate Law & Policy
As countries around the world implement policies to confront climate change, EPIC research is calculating which policies will have the most impact for the least cost.