Reaching net-zero CO2 emissions by 2050, as prescribed by the Paris Agreement, is hard to imagine without a carbon tax. This column estimates that reaching the goal by carbon taxation will require a tax path that peaks at around $1,300 per tonne of CO2, ten times current prices anywhere, and highlights how industries will bear very unequal transition costs. The intuitive smokestack principle, that the biggest direct emitters should pay the most, turns out to be false: costs are instead predicted by a simple statistic capturing how exposed an industry is through its supply chain.
Published by Promoting Economic Pluralism
