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Nicholas Institute for Environmental Policy Solutions

The Political Economy of Pricing Carbon for a 2°C World

Date and Time
Friday, October 12, 2018 - 10 a.m. to 11 a.m.
Field Auditorium, Environmental Hall, 9 Circuit Drive, Durham, North Carolina


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Joseph E. Aldy, associate professor of public policy at the Harvard Kennedy School, university fellow at Resources for the Future, faculty research fellow at the National Bureau of Economic Research, and senior advisor at the Center for Strategic and International Studies, will present The Political Economy of Pricing Carbon for a 2°C World on the Duke University campus, Friday, October 12.

The 2015 Paris Agreement called for “holding the increase in the global average temperature to well below 2°C above pre-industrial levels”, but also acknowledged that “intended nationally determined contributions do not fall within least-cost 2°C scenarios." Although carbon pricing policies have recently emerged as a common tool for implementing countries’ mitigation pledges, there is little evidence that they are closing this so-called emission gap. Aldy will examine the challenges of pricing carbon to deliver on a 2°C warming goal. During the talk, he will synthesize the results of thousands of integrated assessment model scenarios featured in a recent paper to show that increasing overall energy prices under carbon pricing policies in order to promote energy efficiency and conservation will play a critical role in long-term climate stabilization. He will contrast these results with econometric analysis of government fuel pricing policies to illustrate the political economy and institutional barriers to passing through carbon prices into energy prices. He will also evaluate the design of carbon pricing to show the various ways that policymakers undermine incentives for energy efficiency and conservation through cap-and-trade and carbon tax implementation. 

This talk is part of the Nicholas Institute for Environmental Policy Solutions and the University Program in Environmental Policy seminar series featuring leading experts discussing a variety of pressing environmentally focused topics. This talk is also sponsored by the Nicholas School of the Environment and the Sanford School for Public Policy