Carbon taxes vs. “cap and trade”… The Economist

The Economist highlights a study showing that carbon taxes are better at reducing carbon emissions:

”A new IMF working paper by Ian Parry, Victor Mylonas and Nate Vernon finds that taxes raise around twice as much revenue as today’s cap-and-trade schemes, and are roughly 50% better at cutting emissions (see chart). A levy of $70 on each tonne of CO₂ by 2030 would typically raise between 1% and 2.5% of GDP in the G20 club of big economies. It would also allow most to come close to, or even exceed, their pledges under the Paris climate agreement of 2015, which aims to keep global temperatures no more than 1°C or so hotter than today. Researchers from the Potsdam Institute and the Mercator Institute find that if developing countries were to replace fuel subsidies with carbon taxes consistent with the Paris target, the windfall would cover much—95% in India’s case—of what they must spend on infrastructure and public services to meet the UN’s sustainable-development goals.”