Economists wary of sector-by-sector climate plan

Over at Solve Climate, Julia Harte lays out the views of economists and other experts who believe this fragmented system isn’t the most efficient or effective way to go.

From their piece:

“Strictly from an economic efficiency perspective, you're better off with either an economy-wide cap-and-trade policy or an economy-wide carbon tax,” says Michael Livermore, executive director of the Institute for Policy Integrity at New York University Law School.

Unless the carbon tax on fuel is exactly equal to the price of the permits traded between power plants — in which case it's no different than an economy-wide cap-and-trade system — electrical companies and oil companies will have different financial incentives to offset the same quantity of emitted carbon, Livermore says.