Why carbon pricing is not sufficient to mitigate climate change—and how “sustainability transition policy” can help

Abstract

Carbon pricing is often presented as the primary policy approach to address climate change. We challenge this position and offer “sustainability transition policy” (STP) as an alternative. Carbon pricing has weaknesses with regard to five central dimensions: 1) problem framing and solution orientation, 2) policy priorities, 3) innovation approach, 4) contextual considerations, and 5) politics. In order to address the urgency of climate change and to achieve deep decarbonization, climate policy responses need to move beyond market failure reasoning and focus on fundamental changes in existing sociotechnical systems such as energy, mobility, food, and industrial production. The core principles of STP can help tackle this challenge. Many are eager to take more substantive policy steps to address climate change, but pricing carbon pricing alone won’t be sufficient. Image credit: Shutterstock/Shawn Goldberg. Realizing deep decarbonization at the pace necessary to mitigate the worst impacts of climate change has emerged as a pressing challenge for policymakers (1). As a result, the debate about appropriate policy responses has intensified. Many experts and societal actors see carbon pricing as the primary way forward (2⇓–4). Some even use it to argue against other policies, such as fuel efficiency standards. Viewed as the most efficient approach to cut greenhouse gas (GHG) emissions, carbon pricing incentivizes actors to seek the lowest-cost abatement options for their specific circumstances. Consequently, many economists argue that carbon pricing should be the cornerstone of a climate policy response. We question this reasoning. Carbon pricing faces five major issues that limit its use for accelerating deep decarbonization. First, carbon pricing frames climate change as a market failure rather than as a fundamental system problem. Second, it places particular weight on efficiency as opposed to effectiveness. Third, it tends to stimulate the optimization of existing systems rather than transformation. Fourth, it … [↵][1]1To whom correspondence may be addressed. Email: daniel.rosenbloom{at}utoronto.ca. [1]: #xref-corresp-1-1