Rapid emission cuts need a carbon price for the whole economy. This must be introduced in careful stages.
Policymakers must address the need to displace carbon-intensive hydrogen with low-carbon hydrogen, and incentivise the uptake of hydrogen as a means to decarbonise sectors with hard-to-reduce emissions.
If the three biggest economies agree a carbon tax on imports, it will catalyse climate action globally.
Which role carbon pricing could and should play in the future policy mix?
Putting carbon pricing at the centre of the EU climate policy architecture would provide major benefits. Obtaining these benefits requires a uniform, credible and durable carbon price – the economic first-best solution, however, several preconditions required to attain this solution are not yet met. This paper proposes a sequenced approach to ensure convergence of the policy mix on the first-best in the long run.
As the European Union sets out a more ambitious climate policy, carbon price floors provide an opportunity to place greater emphasis on altering expectations, so that market agents anticipate today higher future pay-offs from low-carbon investment.
How US climate policy is likely to evolve, and which international impacts can be expected?
President Biden has promised to implement a levy on carbon-intensive imports, albeit without a federal domestic carbon price. The measure faces a number of difficulties, but could feasibly be implemented. The route chosen by the US will have important implications for the EU's own plans.
Is the green deal a strategy for growth or simply a reallocation mechanism?
This research identifies existing and potential specialisation in green technologies in European Union regions, and proposes an approach to identify policies that can help to realise this potential.
Creating the conditions for the most promising low-carbon sectors to grow is the most efficient way to enable decarbonisation. As sector potential is regional and associated with regions' current strengths in related technologies, policy should aim to boost the growth potential of low-carbon technologies on a regional level.