Pigou Club Pigou Club Homepage – an elite group of economists and pundits that promote the use of pigovian taxes

Congress starts noticing CO2 costs

The Economist writes about some activities in the Congress:
“IN RECENT weeks, a rush of climate-change bills has started circulating
in America’s new Congress…  A national cap on emissions of carbon-dioxide, the main
greenhouse gas, looks closer than ever.”

Cap-and-trade isn’t the best solution for this problem. Mr. Mankiw has this to say: “…they, in essence, give the revenue
from a Pigovian tax lump-sum to a regulated entity. Why should an
electric utility, for example, be given a valuable resource simply
because it has for years polluted the environment?“

Exactly. Replacing cap-and-trade with pigouvian taxes would therefore seem to be a win-win situation.