Climate Policy

3 Credits · Level: Undergraduate

Climate policies can include technology requirements, emissions intensity standards, carbon taxes, cap-and-trade systems, subsidies for low-carbon technologies, and tariffs on imports of carbon-intensive goods. Learn about the economic rationales for and against these and other choices. The course starts with some basic environmental economics. We study the market failure known as externalities—when consumers or producers don’t account for the costs their actions impose on others. Pollution is a prototype, and carbon pollution a specific case. Next we will describe ways to measure the monetary damage from pollution, and hence the benefit of abatement. That’s difficult for current, local air pollution like smog and particulates, and even trickier when the pollutant is global and will affect people for centuries. We will discuss possible objectives for climate policy, including economic efficiency, employment, and environmental justice. The bulk of the course will then be spent analyzing existing and proposed environmental policies on the grounds of efficiency and equity. Applications will include the Inflation Reduction Act, the European Emissions Trading System, and recent efforts by the U.S. EPA to regulate carbon emissions from passenger vehicles and electric power plants.