The hottest Carbon Pricing Substack posts right now

Fat-tailed uncertainty about climate damages does not make cost-benefit analysis pointless; if your probability distribution for the social cost of carbon has a finite mean, you can minimize expected total cost by using that mean as the weight for CO2.
Electricity systems lie on a cost-versus-CO2 trade-off curve, and the slope at the chosen point is the society's effective social cost of carbon, so publishing the curve and choosing a median public preference gives a consistent grid choice and SCC.
Fat-tailed SCC distributions can have means far above their most likely value, which implies much higher justified carbon prices; those revenues can be used to replace or rebate other taxes so the policy is progressive.

CBAM will have only a small effect on overall GDP and emissions at first, but that hides much larger impacts for specific industries.
High‑carbon exports like cement, steel and chemicals could fall sharply by 2034 if producers don’t decarbonise, because the CBAM exemption quota shrinks and its coverage expands.
Tying EU market access to carbon intensity creates a global incentive to clean up production, pushing decarbonisation beyond Europe rather than just shifting trade to lower‑cost markets.

Cutting import tariffs causes domestic firms to cut their greenhouse gas emissions, with affected companies showing about 20–25% lower scope 1 intensity and 5–10% lower scope 2 in the year after a tariff reduction.
The reason is competition: cheaper imports push firms to innovate, switch to greener products that fetch a premium, or invest in modern, less emissions‑intensive machinery to protect margins.
Broadly protecting home markets with higher tariffs can weaken competitive pressure to decarbonize, though targeted border measures aimed at preventing regulatory arbitrage can still be useful.

Europe is creating a unique carbon market that will charge importers for the carbon in goods like cement and steel. This could raise around €100 billion in its first years, encouraging other countries to reduce emissions.
Carbon removal technologies can turn captured CO₂ into valuable products like concrete, fuels, and chemicals. This means companies can make money while helping the environment, which is vital for creating new industries.
To succeed, European firms need to focus on scaling up their operations and capitalizing on new technologies. It's not enough to follow market rules; they need to invest in building strong companies that can compete globally.

CBAM will raise EU import and export prices only very slightly on average, so it is unlikely to drive broad inflation or meaningfully cut business profits.
The price impact is highly uneven across countries and products: some imports like cement from dirty producers can become many tens of percent more expensive, while most goods see negligible increases.
Those targeted price increases make polluting imports less competitive and incentivise cleaner production or sourcing, pushing exporters to upgrade their methods to stay in the EU market.

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