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….