Giving Compass' Take:

• Barry G. Rabe explains the political challenges of passing carbon pricing (carbon tax or cap-and-trade) legislation and highlights a few success stories. 

• Why are regulatory market solutions for environmental problems so controversial? How can funders effectively reduce carbon emissions at scale? 

• Learn about the potential economic benefit of fighting climate change. 

In practice, carbon pricing adoption remains one of the heaviest political lifts anywhere in the world.  Since the 1997 Kyoto agreement, the rate of non-symbolic carbon price adoption has been rather modest.  And carbon taxes and cap-and-trade are among the most likely climate policies to be reversed after they have been launched.

In the United States, the political path forward is challenging at best.  The U.S. House Climate Solutions Caucus nears triple digits in membership but a great many of its Democratic and Republican members get fuzzy on policy particulars, often embracing broad renewable energy goals rather than some form of carbon price.  Even after last year’s multi-state declaration of fealty to meeting Paris emission reduction goals with aggressive bottom-up innovation, the actual adoption of state carbon pricing policies remains quite modest and confined to coastal states.

But there are important success stories to consider, cases where carbon pricing has not only been adopted but sustained through subsequent election cycles while delivering on some of its performance goals.  These include the earlier Nordic cases, more recent carbon taxes in British Columbia, Ireland, and Iceland, and the Northeastern state cap-and-trade program, the Regional Greenhouse Gas Initiative.

Carbon pricing success cases have also featured sound public management, reflected in transparency in operations as well as ability to adapt to changing circumstances over time.  This has not required creation of massive new bureaucracies but instead has drawn upon existing talents within government, often in creative ways.

Perhaps most significantly, political leaders found ways to build coalitions across party divides over time rather than isolate carbon pricing as the pet product of a single party and elevate the risk of future reversal.  This included some accommodation of political constituencies to broker viable compromise to facilitate launch and endurance across election cycles.  While no perfect carbon price exists anywhere in the world, the global track record across past decades does include some successes alongside numerous flops.

Read the full article about carbon pricing by Barry G. Rabe at Brookings.