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SPEA researchers help produce World Bank policy guide on carbon pricing

Mar 30, 2017

Faculty and graduate students from the Indiana University School of Public and Environmental Affairs played key roles in producing a detailed guide for policymakers developing carbon taxes aimed at slowing climate change. The guide was released last week by the World Bank.

Lead authors of “Carbon Tax Guide: A Handbook for Policy Makers” are SPEA professor Kenneth R. Richards and Darragh Conway of the consulting firm Climate Focus. Stephanie Hayes Richards, a SPEA graduate who is managing principal of Bloomington-based Gnarly Tree Sustainability Institute, led the preparation of a technical appendix to the guide.

Also contributing were SPEA associate professors Justin Ross and Anh Tran, assistant professor Anthony Liu, recent graduates Delaney Bolger and Keyao Sun and graduate students Yu Song, Logan Pfeiffer, Jingyao Gu and Zoya Atiq. Bloomington writer Elisabeth Andrews provided technical editing.

Kenneth Richards said governments have shown renewed interest in using carbon taxes to reduce emissions of greenhouse gases associated with climate change. Over three-fourths of the world’s nations have developed targets for reducing greenhouse gases under the Paris Agreement on climate change and are looking for cost-effective ways to meet their goals.

“It is important that policymakers understand the implications of their decisions when they are designing carbon taxes,” Richards said. “With this World Bank publication, we have translated the extensive body of research to provide accessible guidance for practitioners. As the case studies demonstrate, each government has different needs, objectives and circumstances.”

A carbon tax is a fee designed to impose costs on users of goods and services that produce the greenhouse gas carbon dioxide. The idea is that higher prices will create incentives to conserve or switch to green technologies and products. Economists believe a carbon tax, as opposed to government regulation, will improve efficiency as polluters find low-cost ways to reduce emissions.

The carbon tax guide was released at a meeting in New Delhi of the World Bank’s Partnership for Market Readiness, attended by representatives of nations around the world. Also helping produce the guide was Climate Focus, an international climate change firm based in Amsterdam.

The guide includes two parts: a 170-page handbook with guidance for governments considering a carbon tax; and a 104-page appendix with detailed case studies of 17 jurisdictions with carbon taxes. The appendix is the most comprehensive set of carbon tax case studies to date.

Jurisdictions that have enacted or proposed carbon taxes include 10 countries in northern and western Europe, Australia, Chile, India, Japan, Mexico, South Africa and British Columbia, Canada.

In the United States, prospects for a carbon tax seem dim with the Trump administration rolling back former President Barack Obama’s climate initiatives and top officials expressing doubt about climate change. According to news reports, a delegation of Republican carbon-tax advocates met last month with a top economic adviser to the president, but a White House official insisted a carbon tax won’t be considered.

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