Climate Policy: Is Carbon Pricing the Ultimate Solution?

Prof. Samantha Ashman (University of Johannesburg), Dr. Fausto Corvino (Sant’Anna School of Advanced Studies), Mariana Inés Micozzi (Germanwatch e.V.), Dr. Sanjay Patnaik (Center for Regulation and Markets; Brookings)
In recent years, philosophers, economists, and political scientists dealing with climate change seem to agree on one point: A carbon tax reform, if properly structured, could be the magic recipe for tackling the climate crisis. It allows overall emissions to be reduced without curtailing the disposable income of the poorest, but rather increasing it. The carbon tax thus seems to yield a triple dividend: mitigation effectiveness, efficiency in allocating emission cuts (the market takes care of that), and fairness (relative to income, it is not regressive). In this panel, we will explore the question of carbon pricing from multiple angles by laying out the economic rationale for carbon pricing and complementing it with critical perspectives on market-based solutions to climate change. This discussion will be exemplified by a case study from the Global South, namely the introduction of a carbon tax in Argentina. Lastly, we touch upon a less explored issue, namely the low behavioral plasticity of the global top 1%, which could result in a carbon tax reducing the possibilities of the poorest to transform income into emission-generating actions, but leaving the richest free to do as they wish.
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