Since 2009, the federal executive branch has had clear legal authority to implement regulations to reduce greenhouse gas emissions. While the Trump Administration is unlikely to exercise this authority, a future administration almost certainly will. Therefore, there is value in determining the most efficient implementation of such policies.
This report compares the effectiveness and economic impact of two commonly considered policies: a carbon tax and direct regulation. It finds that carbon taxes are significantly more cost-effective at reducing greenhouse gases than regulations, with regulations costing more than twice as much per metric ton of carbon dioxide abated while reducing far fewer emissions.