98. Is America Ready to Take a ‘Baby Step’ Toward Carbon Pricing?

Is America Ready to Take a ‘Baby Step’ Toward Carbon Pricing? Most people recognize that carbon dioxide (CO2) is a greenhouse gas (GHG), and while not everyone agrees, a majority of climate scientists believe increasing GHG concentrations in the Earth’s atmosphere are causing climate change. Carbon pricing is a market-based strategy for reducing CO2 emissions. The goal of carbon pricing schemes is to place a value on carbon emissions so that the costs can be passed on to GHG emitters, thereby creating financial incentives to reduce emissions. However, enacting a carbon pricing strategy in the U.S. has been difficult. Some observers blame the fossil fuel industry, such as coal mining and oil drilling companies, for lobbying in Washington to halt carbon pricing efforts. Yet, even some fossil-focused groups are getting behind the idea. In March this year, the American Petroleum Institute (API), an advocacy group representing all segments of America’s natural gas and oil industry, endorsed “a Carbon Price Policy to drive economy-wide, market-based solutions.” Another strong proponent of carbon pricing is Neil Chatterjee, a former commissioner and chairman with the Federal Energy Regulatory Commission (FERC), who recently joined Hogan Lovells as a senior advisor in the firm’s Energy Regulatory practice group. As a guest on The POWER Podcast, Chatterjee said, “As someone who had a front row seat to the challenges within competitive power markets in the U.S., I have really come to the conclusion that pricing the externality—putting a price on carbon—is a vastly superior approach to carbon mitigation than subsidies or mandates or over-reaching burdensome regulations. I just think that given those choices—I saw it firsthand—a carbon price is a far more effective and efficient market-based approach to carbon mitigation.” Chatterjee spearheaded an effort to provide clarity for regional transmission organizations (RTOs) and independent system operators (ISOs), which resulted in a FERC policy statement on carbon pricing. Cha