John Broome and Duncan Foley argue that future generations should shoulder the full burden of climate mitigation. To achieve this, they propose that economists design a new institution they dub “the World Climate Bank.” Their argument appeals primarily to self-interest and to the idea of making a Pareto improvement that delivers “efficiency without sacrifice.” This article argues against their strategy on both ethical and pragmatic grounds. In general, “making the grandchildren pay” poses a serious threat to future generations and humanity’s progress. What is needed is a “Climate Justice World Bank” that respects principles of global and intergenerational ethics.

Given growing concerns among policymakers about the inflationary consequences of climate policies, I examine how households in the Euro Area adjust their inflation expectations in response to carbon policy shocks. The main finding is that a shock increasing energy inflation by one percentage point leads households to raise their inflation expectations by up to 0.1 percentage points. This aggregate response masks important cross-country heterogeneity, where the expectations response in countries with a larger share of energy-intensive goods in household consumption and a stronger deterioration of consumer sentiment is more pronounced. The timing and magnitude of these responses closely mirror those following an oil supply news shock, suggesting a common household expectations response to energy price shocks regardless of their source. Decomposing the response reveals that households adjust their expectations primarily through the energy price pass-through channel rather than in direct response to the shock itself.

We examine the distributional impact of domestic carbon pricing in three Sub-Saharan African countries. We combine household expenditure surveys and sectoral carbon intensity data derived from a multi-regional input-output model for Ghana, Nigeria and Uganda. Our findings indicate that domestic carbon pricing is progressive in all three countries. This primarily results from higher budget allocations for direct energy consumption in wealthier households, especially concerning motor vehicles and electrical appliances. Disparities in welfare losses within income groups are primarily due to varying energy consumption patterns. Importantly, we identify low-income households as being disproportionately affected by carbon taxes. Lump-sum transfers could fully compensate most households in the bottom two income quintiles, significantly reducing poverty. Our comparative analysis emphasizes the importance of country-specific differences in energy expenditures and carbon intensities in shaping the distributional outcomes of carbon taxes.

Policymakers frequently voice concerns that carbon pricing could impair economic development in the short run, especially in low-income countries such as Uganda. Using a consumer demand system for energy and food items, we assess how households’ welfare, and demand for food and energy, would respond to a carbon price of USD40/tCO2. We find welfare losses of 0.2–12 per cent of household expenditure on food and fuel, due to the carbon price. Average demand for electricity and kerosene decline by 11 and 20 per cent respectively, while firewood demand rises by 10 per cent on average. We observe shifts within food consumption baskets, with declines in the demand for meat & fish, and vegetables, alongside an increase in cereal consumption. Household nutrition is adversely impacted, with declines in protein and micronutrient intake across the population. Complementary social protection policies such as cash transfers are therefore required to ease adverse effects on economic development in Uganda.

The European Union (EU) has extended the application of the EU emissions trading scheme to international shipping and the International Maritime Organization (IMO), and various countries are working on implementing instruments that put a price on greenhouse gas emissions (GHG) from this sector. Due to these policy developments, GHG emissions from shipping may become subject to multiple pricing instruments in the coming years. In response, stakeholders have voiced concerns over the potential negative impacts that this could have on both the shipping industry and international trade, and called for double pricing to be avoided. Against this background, this article discusses the potential pros and cons of double pricing GHG emissions from shipping and identifies options to reduce its negative impacts. Overall, the article finds that the case to avoid double pricing rests on a balance of competing interests, contextual factors, and instrument design. If policymakers aim to avoid double pricing, regulatory cooperation between policymakers working on shipping decarbonisation and border carbon adjustment mechanisms can provide important lessons on how to do so.

To avoid penalizing exporters that already paid carbon prices, the EU Carbon Border Adjustment Mechanism credits carbon taxes and Emissions Trading Schemes in third countries. By excluding instruments of traditional regulation (e.g. emission standards) and indirect carbon prices (e.g. fuel excise taxes) from this crediting mechanism, the EU is criticized for discriminating against countries that do not follow its climate model, in breach of international trade and climate law. This article seeks to nuance this criticism by arguing that the calculation of actual emissions (instead of default values) under the EU CBAM allows exporters to reflect compliance with foreign emission standards, and thus respects states' right to pursue emission reductions through traditional regulation. However, amendments of the CBAM Regulation are necessary to recognize the positive and negative impact of indirect carbon prices on decarbonization, and the role of carbon-crediting mechanisms in equalizing carbon costs in a more flexible and equitable way.

There has been much debate about the role of carbon prices in reducing greenhouse gas emissions in Australia. However there has been far less attention paid to the evaluation of complementary and other non-price policies designed to accompany the carbon price. The purpose of this article is to develop a framework for considering the case for, and effectiveness of, the wide range of existing and proposed complementary policies that are designed to accompany the carbon price in the effort to reduce Australia’s greenhouse gas emissions. The article concludes that an effective evaluation of complementary policies should include identifying the market failure the policy is aimed at correcting. The complementary policy should work in conjunction with, not opposition to, other polices aimed at reducing emissions. It should be complementary with the policies of other levels of government and it should also consider issues of efficiency, equity, accountability and adaptability.

The plan to introduce a carbon pricing scheme in Australia has focused attention on the future relevance and necessity of using other policy instruments to reduce carbon emissions. Significant reports, including the Wilkins Review and reports by the Productivity Commission, have argued using the standard neoclassical economics framework that once a carbon price is established, it should be (almost) the only instrument needed to tackle climate change mitigation in Australia. With a small number of exceptions for complementary instruments to address some market failures, the use of other climate policy instruments, it is argued, will result only in unnecessary duplication and potential distortions. The aim of this article is to show that there are, in fact, a significant number of rationales for implementing several climate policy instruments in combination with a carbon price, and we should not be too quick to dismiss certain climate policy instrument combinations.

Economists have for decades recommended that carbon dioxide and other greenhouse gases be taxed – or otherwise priced – to provide incentives for their reduction. The USA does not have a federal carbon tax; however, many state and federal programs to reduce carbon emissions effectively price carbon – for example, through cap-and-trade systems or regulations. There are also programs that subsidize reductions in carbon emissions. At the 2022 meetings of the American Economic Association, the Society for Benefit-Cost Analysis brought together five well-known economists – Joe Aldy, Dallas Burtraw, Carolyn Fischer, Meredith Fowlie, and Rob Williams – to discuss how the USA does, in fact, price carbon and how it could price carbon. Maureen Cropper chaired the panel. This paper summarizes their remarks.