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Report

Nuts, Bolts, and Pitfalls of Carbon Pricing: An Equity-Based Primer on Paying to Pollute

A man stands in the foreground of a neighborhood with brick multifamily buildings and smoke stacks on the horizon.

While carbon pricing and emissions trading schemes have been a part of climate policy discussions for decades, the concept has gained popularity in recent years. The term usually refers to two common policy mechanisms, "cap and trade" and a "carbon tax," which are market-based measures that create a carbon market by putting a tax, fee, or price on certain greenhouse gas emissions to give corporations an incentive to reduce these emissions. The questions we begin to ask, however, are around racial justice implications, including the extent to which these schemes phase out fossil fuel use and extraction – the ultimate solution to addressing the climate crisis. 

Nuts, Bolts, and Pitfalls of Carbon Pricing: An Equity-Based Primer on Paying to Pollute finds that carbon pricing and trading systems are not very effective or equitable measures for curbing carbon emissions.

Why Carbon Pricing and Trading Is a False Solution

Our research shows that these systems can often play out as what amounts to sophisticated international shell games, where little net decline in emissions occurs because the measures simply serve to transfer pollution from one location or one country to another, depending on who can afford to pollute.  Within the U.S., there is evidence that carbon pricing and trading can exacerbate existing inequalities by creating or worsening "sacrifice zones." These zones are communities, often with Black Indigenous, People of Color  (BIPOC) residents and households with low-income, in or near where significant fossil fuel-related pollution occurs. Thereby sacrificing the wellbeing of our communities to fuel the excesses of people living elsewhere.

We shouldn't be discussing anything about fossil fuels in a just energy transition. That's plain and simple.

Katherine Egland, NAACP Environmental and Climate Justice Board Chair

As consensus grows around the urgency of the climate crisis, we're confronted with a range of false solutions that deepen inequalities and are insufficient to meet the scale and speed of needed changes. In many cases, the fight against climate change becomes a big business opportunity – with the same political and economic interests that are most responsible for the climate crisis championing supposed solutions. In fact, some of the worst environmental offenders co-opt the language of environmental advocates in order to protect their bottom line, neutralize climate legislation, and preserve the status quo. It is important to recognize that these false solutions not only fail to deliver on their environmental claims, but often worsen our ecological and economic crises.

Read the carbon pricing primer below to learn about:

  • Racial justice implications of carbon pricing
  • Four key reasons that carbon pricing and trading schemes are false solutions
  • Debunking three "equity" arguments for carbon pricing
  • What to do if carbon pricing legislation is moving forward in spite of our best efforts to advance real solutions--how to insert harm reduction measures.
  • 18 domestic policy recommendations for the United States to legislate climate justice
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