Decarbonizing the Energy Mix: Carbon Pricing Implications and Path Forward

Abstract

Debates are being had around the globe on how to reduce carbon emissions most efficiently and economically. Whether though a carbon tax or carbon trading program, or through wholesale market pricing schemes, carbon mitigation strategies for reducing carbon dioxide emissions in the electricity sector are gaining traction. With the aggressive fiscal and monetary policies and stimulus programs in place across the globe, attempting to soften a global economic downturn and speed the economic recovery from the COVID‐19 pandemic, governments and businesses alike are voicing concerns about pending large budget deficits and their potential to slow and prolong economy recovery. Governments around the world will be forced to reduce spending in coming years or find ways to raise revenues. The tax code is a very efficient and effective way to steer investments toward innovative and transformative capital projects, including projects that support decarbonization.