cepr.org
The economic effects of carbon pricing
Carbon pricing policies are critical tools to mitigate the effects of climate change. This column examines the impact of European carbon pricing policies on the economy, contrasting the common carbon market with national carbon taxes. The authors find that both policies have effectively reduced emissions, but price changes in the carbon market have been associated with larger economic costs. They also discuss four factors that can account for the differential effects and the impacts of the carbon market vary substantially across regions, with implications for policymakers seeking to design effective carbon pricing policies.
