Edited by Janet E. Milne and Mikael S. Andersen
Chapter 10: The political acceptability of carbon taxes: lessons from British Columbia
Governments seeking to reduce greenhouse gas (GHG) emissions confront a stark policy tradeoff. Noncompulsory policies like information programs and subsidies are politically acceptable, but largely ineffective by themselves. Compulsory policies that price emissions or regulate technologies and fuels can be effective, but only if their stringency is at politically risky levels. For the last two decades, most industrialized countries have favored noncompulsory policies, and this explains in part the failure to achieve emissions-reduction targets (Simpson et al. 2007). However, the gradually emerging evidence of domestic climate policy failure has increased pressure on policymakers to seriously consider compulsory policy options, ranging from emissions pricing to regulations. Emissions pricing—via carbon taxes or cap-and-trade schemes—are preferred by economists, as they should achieve environmental goals at the lowest societal cost. Regulations on technologies and fuels are likely to be less economically efficient, but their price impacts are not as readily apparent to voters, which is why some regulations are politically palatable (except when they prohibit technologies that many consumers value highly).
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