Confronting the Climate Challenge

U.S. Policy Options

Lawrence Goulder and Marc Hafstead

Columbia University Press

Confronting the Climate Challenge

Pub Date: December 2017

ISBN: 9780231179027

376 Pages

Format: Hardcover

List Price: $65.00£50.00

Pub Date: December 2017

ISBN: 9780231545938

376 Pages

Format: E-book

List Price: $64.99£50.00

Confronting the Climate Challenge

U.S. Policy Options

Lawrence Goulder and Marc Hafstead

Columbia University Press

Without significant reductions of greenhouse gas emissions, climate change will cause substantial damage to the environment and the economy. The scope of the threat demands a close look at the policies capable of reducing the harm. Confronting the Climate Challenge presents a unique framework for evaluating the impacts of a range of U.S. climate-policy options, both for the economy overall and for particular household groups, industries, and regions. Lawrence Goulder and Marc Hafstead focus on four alternative approaches for reducing carbon dioxide emissions: a revenue-neutral carbon tax, a cap-and-trade program, a clean energy standard, and an increase in the federal gasoline tax. They demonstrate that these policies—if designed correctly—not only can achieve emissions reductions at low cost but also can avoid placing undesirable burdens on low-income household groups or especially vulnerable industries.

Goulder and Hafstead apply a multiperiod, economy-wide general equilibrium model that is distinct in its attention to investment dynamics and to interactions between climate policy and the tax system. Exploiting the unique features of the model, they contrast the shorter- and longer-term policy impacts and focus on alternative ways of feeding back—or “recycling”—policy-generated revenues to the private sector. Their work shows how careful policy design, including the judicious use of policy-generated revenues, can achieve desired reductions in carbon dioxide emissions at low cost, avoid uneven impacts across household income groups, and prevent losses of profit in the most vulnerable U.S. industries. The urgency of the climate problem demands comprehensive action, and Confronting the Climate Challenge offers important insights that can help elevate policy discussions and spur needed efforts on the climate front.
This book shows brilliantly how the United States can tackle the climate challenge effectively, using the fiscal system to slow climate change while protecting those who are vulnerable to the costs of a rapid transformation of the energy system. William Nordhaus, Yale University
Goulder and Hafstead’s thorough and thoughtful examination of some of our most promising climate policy options shows that how we implement change matters as much as the changes we make. This book will be a useful roadmap as we work to reduce the emissions driving the disruption of our climate. Sheldon Whitehouse, United States Senator from Rhode Island
Confronting the Climate Challenge is a rigorous and insightful analysis of policies to reduce CO2 emissions in the United States, written by the top experts in the field. It should be read by anyone who is interested in taking action to reduce the threat of climate change. Maureen Cropper, University of Maryland
Climate change policy options need to be identified and analyzed with care and a sense of the future, just as Larry Goulder and Marc Hafstead have done in this important book. George P. Shultz, Stanford University
This important book by two leading authorities on the economics of climate change policy provides a rigorous assessment of the benefits and costs of alternative U.S. climate change policies, including a carbon tax, a cap-and-trade program, a clean energy standard, and an increase in federal gasoline taxes. This dispassionate analysis is particularly valuable and important—for scholars, policy makers, and the general public. Robert N. Stavins, Harvard University
How costly will it be for the United States to reduce greenhouse gas emissions? Economists Larry Goulder and Marc Hafstead—two of the top practitioners in the field—walk us knowledgeably through the various options and show how climate action can produce net benefits to society without jeopardizing the economy. Must reading for politicians, policy analysts, and climate activists. Jerry Taylor, Niskanen Center
Curbing greenhouse gases is one of the most challenging issues we face. While the benefits are potentially huge, developing policies to keep costs down is urgent. Goulder and Hafstead's well-written and accessible book carefully explains the issue and evaluates the main policy proposals. It is a must read for anyone interested in the details of climate mitigation. I strongly recommend it. Robert Mendelsohn, Yale University
Preface
Acknowledgments
I: Introduction And Analytical Background
1. Introduction
2. Climate Policy, Fiscal Interactions, and Economic Outcomes
II: The Model’s Structure, Inputs, and Baseline Output
3. Structure of the E3 Model
4. Data, Parameters, and the Reference Case Path
III: Policy Approaches And Outcomes
5. Two Approaches to Carbon Dioxide Emissions Pricing: A Carbon Tax and a Cap-And-Trade System
6. Alternatives to Emissions Pricing: A Clean Energy Standard and a Gasoline Tax Increase
7. Distribution of Policy Impacts Across Industries and Households
IV: Conclusions
8. Key Insights
Appendix A
Appendix B
Appendix C
Appendix D
Notes
References
Index

About the Author

Lawrence Goulder is the Shuzo Nishihara Professor of Environmental and Resource Economics at Stanford University and director of the Stanford Environmental and Energy Policy Analysis Center. He is also senior fellow at the Stanford Institute for Economic Policy Research, a research associate at the National Bureau of Economic Research, and a university fellow at Resources for the Future.

Marc Hafstead is a fellow at Resources for the Future. He was a postdoctoral fellow at the Stanford Institute for Economic Policy Research from 2011 to 2013.