Carbon Pricing Mechanisms
Cap-and-trade markets, carbon taxes, and border adjustments.
Internalizing Externalities
Carbon pricing shifts the merit order of power dispatch. A sufficiently high carbon price forces high-emitting coal plants to run less frequently than lower-emitting combined-cycle gas turbines (CCGT), immediately reducing grid intensity before any new capital is deployed.
Interactive: Carbon Tax Dispatch Impact
Adjust the parameters below to run the model based on current baseline data.
Result: Calculating...
Frequently Asked Questions
What is the social cost of carbon (SCC)?
The SCC is an estimate of the economic damages associated with a small increase in carbon dioxide emissions, conventionally one metric ton, in a given year. It is used in cost-benefit analyses for regulations.
What are Carbon Border Adjustment Mechanisms (CBAM)?
A tariff placed on imported goods based on their embedded carbon content, designed to prevent 'carbon leakage' where industries relocate to countries with weak climate regulations.