Argument: The consensus among economists is that a carbon tax is the better approach

Issue Report: Cap-and-trade versus carbon tax


Surveys that show general support among economists for a carbon tax system:

  • A 2/07 Wall Street Journal Survey found that 54 percent of economists favor a carbon tax over all other approaches.[1]
  • “In A July 2006 survey, research firm GlobeScan put the question: ‘What is the best tool to reduce emissions?’ to its Climate Forum, consisting of sustainability experts and climate change solution providers. The top answer? A carbon tax.”[2]

David Roberts. “Carbon tax catching on?”. April 3rd, 2007 – “economists and policy wonks prefer a tax, because it would provide a predictable price trajectory and would be less subject to gaming and manipulation.”

Ronald Bailey. “Carbon Taxes Versus Carbon Markets: What’s the Best Way to Limit Emissions?” May 18, 2007 – “Surprisingly, a great many free marketeers favor higher taxes on carbon-emitting fossil fuels over a cap-and-trade carbon market, including former Federal Reserve chairmen Paul Volcker and Alan Greenspan, former chairman of President Bush’s Council of Economic Advisers Gregory Mankiw, and former Duke Energy CEO Paul Anderson.” Given that these “free marketeers” generally favor free-market approaches to problems, the implication (contention) of their “surprise” support of a carbon tax may be that the case for such an approach is significantly stronger and more compelling that a cap-and-trade market approach.

Greg Mankiw, Harvard Economics professor and and former chairman of President Bush’s Council of Economic Advisors formed what is known as the Pigou Club, which is an extensive list of prominent economists that support a carbon tax (among other “Pigovian” taxes which aim to change bad behavior [sin taxes]). He contends that there is a “consensus” among economists that a carbon tax would be the best approach.