Examination of the Carbon Fee Alternative for the State of California

The California Air Resources Board (ARB), as a result of a recent court decision, is required to provide information about a carbon fee as one of several alternatives to reduce emissions of greenhouse gases. Other alternatives include direct regulation of facilities, cap and trade, and a mix of sectoral strategies. This paper examines the carbon fee as an option for controlling greenhouse gases and compares it to other regulatory alternatives, such as the cap-and-trade approach ARB initially decided to take.