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Carbon Price Will Reduce Emissions More than Computer Models Predict. By
Noah Kaufman, World Resources Institute, 1/13/16. “How much would a carbon
tax reduce U.S. emissions? The U.S. Energy Information Administration (EIA)
found that if the country had set a carbon tax of $25 per ton in 2015 and
increased it by 5 percent each year, CO2 emissions would have fallen to 32
percent below 2005 levels by 2030. But new research shows that this may
underestimate a carbon price’s true potential. In our new issue brief, Putting a Price on Carbon Emissions (PDF, 36 pp), we outline the specific ways a carbon price (meaning
either a carbon tax or cap-and-trade program) would encourage emissions
reductions by changing the behavior of producers, consumers and investors
throughout the economy. We compare these incentives to the corresponding
forecasts in EIA’s model, and we find that the model is likely underestimating emissions reductions in
important ways.
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