Friday, April 2, 2010

New CAFE Standards and the Social Cost of Carbon

The April 2 issue of Scientific American contains a story (here) about the social cost of carbon implicit in the new automobile fuel economy standards EPA introduced yesterday (about which I posted here). The price is approximately $21/ton or 20 cents per gallon. Some economists have already claimed that such a price is too low to affect consumer behavior. In my view, any non-zero price for carbon is a step in the right direction on climate policy.

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