The Politics of American and Canadian Carbon Pricing

30 Pages Posted: 1 Aug 2011 Last revised: 15 Aug 2014

See all articles by Barry G. Rabe

Barry G. Rabe

University of Michigan at Ann Arbor - Gerald R. Ford School of Public Policy

Christopher P. Borick

Muhlenberg College

Date Written: 2011

Abstract

A vast economics literature embraces taxation of the carbon content of fossil fuels as the superior policy approach for reducing greenhouse gas emissions and pursuing other major energy policy goals. However, national government experience around the world suggests that carbon taxes face exceedingly difficult political hurdles. Federal experience in the United States and Canada confirms this pattern. This paper reviews sub-federal policy development among American states and Canadian provinces, a great many of whom have been active in climate policy development. With one notable exception, it concludes that explicit carbon taxation appears to remain a political non-starter. At the same time, states and provinces have been placing indirect carbon prices on fossil fuel use through a wide range of policies over the past fifteen years. These tend to strategically alter labeling, finding different ways to characterize new or expanded policies by avoiding the terms of "tax" and "carbon" in imposing costs. The paper offers a framework for considering such a diverse set of strategies and examines common design features, including direct linkage between cost imposition and fund usage to build political support.

Keywords: carbon taxation; energy taxation; climate policy; energy policy: Canadian energy policy; American energy policy

JEL Classification: R48, Q48, Q38, Q28, L98, K32, H71, H77

Suggested Citation

Rabe, Barry G. and Borick, Christopher P., The Politics of American and Canadian Carbon Pricing (2011). APSA 2011 Annual Meeting Paper. Available at SSRN: https://ssrn.com/abstract=1901193

Barry G. Rabe (Contact Author)

University of Michigan at Ann Arbor - Gerald R. Ford School of Public Policy ( email )

735 South State Street, Weill Hall
Ann Arbor, MI 48109
United States
734.615.9596 (Phone)

Christopher P. Borick

Muhlenberg College ( email )

2400 West Chew St
Allentown, PA Pennsylvania 18104
United States

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