This project is undoubtedly taking a step towards more sustainable energy, but the high costs and regulatory hurdles of this emerging sector worry me. I am also concerned about the efficacy of placing the solar power plant in Southern California. The company has had great success in the Mojave desert- but are the two places necessarily comparable? Still, if it is possible, the idea of powering 200,000 households and preventing 17 million tons of carbon emissions during the life of the plant sounds outstanding. I am also thrilled to learn that California state regulations will require that one-third of their power come from renewable sources by 2030. For once it seems policy is heading in the right direction.

In my opinion, this article highlights the fact that the American population is beginning to understand and accept that there exists a connection between our carbon emissions and the health of our environment. I applaud the states that have participated in this initiative but am left feeling as though there is much left to do, both on a national and global scale. The article underscores the new clean energy and energy efficiency jobs that are being generated. However, they neglect to mention the numerous health benefits which also have positive effects on our population and economy. It will be interesting to see if and when the RGGI initiative spurs any changes in energy policy on the federal level.

In this article we see that once again, the United States is the outlier when compared to other developed nations (think healthcare, maternity leave, etc). Out of curiosity I did some quick research to find out if perhaps the practically negligible federal carbon tax might actually be bolstered by state carbon taxes. However, I found that there are few states that enforce additional carbon taxes. The behavior that this lack of a tax generates should not be surprising. Of course American companies emit without restraint and pollute as if there are no consequences (there certainly aren’t major tax consequences!). It does not make sense that we forgo taxing activities that generate negative externalities. Unlike income taxes, this tax should be less disputed and easier to justify. As one of the countries that emits the most carbon, one would expect that we would feel the need to step up and begin a more stringent carbon policy; especially in light of the rising costs due to climate change that the article points out.

Most people think that the only reason to tax is to generate government revenue. In that particular situation, we place a tax on a market that is efficient and make it inefficient, generating a deadweight loss. Pigouvian taxes are different in that they are used as a mechanism to restore a distorted market. Unlike the previous situation, the Pigouvian tax is implemented in a market that cannot allocate resources efficiently. These resources are misallocated because the price does not reflect the true cost. The Pigouvian tax pushes the market to an efficient equilibrium that is socially optimal. This is very different from the fiscal tax that results in a reduction of efficiency. Still, the idea of a tax generating a “deadweight gain” rather than a loss is a rather foreign concept for most economics students and most certainly the general population. As much as I think Pigouvian taxes in the case of environmentally inefficient situations would be ideal, that does not necessarily translate into Congress enacting new tax legislature over night. Misinformation on behalf of the general public seems to be an emerging theme in this course.

As the author notes, carbon pollution leads to a host of negative externalities. For that reason, most economists agree that it should be taxed. Our entire society bears the burden of carbon pollution, not just the individuals directly contributing to the contamination. As we discussed in class on Thursday, market failure occurs when marginal private benefit and marginal social benefit are not equal. Carbon pollution resulting from carbon intensive industries leads to an imbalance in social and private welfare. Ideally a tax would decrease carbon consumption and put MSB and MPB in equilibrium. By enacting a carbon tax, Congress could effectively curtail carbon consumption, generate revenue, and keep our air a little cleaner. I think the author addresses many of the positive aspects of a carbon tax but fails to consider some of the complications that could arise. All taxes have costs- costs arising from administering and collecting the tax. The appropriate level of the tax must also be determined so that the marginal social and private benefits are in equilibrium. Another issue that should be addressed is the potentially regressive nature of a carbon tax. Another concern with implementing a carbon tax is that firms may shift production to other countries where such a tax does not exist. In this case, the tax is ineffective. A carbon tax would be most successful if many countries collectively agreed to adhere by it.