Five Myths About Carbon Pricing

Gilbert E. Metcalf,

November 2022

While carbon pricing, in general, and carbon taxes, in particular, are popular with economists, they are subject to considerable misunderstanding among policy makers and the public.  In this paper I consider and refute five myths about carbon taxes:  1) that a carbon price will hurt economic growth; 2) that carbon pricing will kill jobs; 3) that a carbon tax and cap and trade program have the same economic impacts; 4) that we can’t achieve carbon reduction targets with a carbon tax; and 5) that carbon pricing is regressive.  I then discuss implications for policy making.

Keywords:  Climate Change, Carbon Pricing, Carbon Tax, Distribution, Economic Growth

JEL Codes:  H23, Q43, Q48, Q54