Today, June 9, 2008, the Government Accountability Office issued its report “Expert Opinion on the Economics of Policy Options to Address Climate Change.” The report represents the views of the 18 economists who were identified by the GAO working with the National Academy of Sciences.
- All of the panelists agreed that the Congress should consider using a market-based mechanism to establish a price on greenhouse gas emissions.
- 14 of 18 recommended additional actions, such as investment in research and development of low-emissions technologies.
- 14 of 18 were at least moderately certain that the benefits of their recommended portfolio of actions would outweigh the costs.
- To establish a price on greenhouse gas emissions, most of the panelists preferred either a tax on emissions or a hybrid policy that incorporates features of both a tax and a cap-and-trade program (in which the government could sell additional emissions permits if the permit price rose above a predetermined level).
- A majority of panelists agreed that the United States should establish a price on greenhouse gas emissions as soon as possible.
The panelists stressed that the market-based approach is important because it gives the government the ability to raise revenue through a tax or sale of emissions permits and to use that revenue to offset the adverse effects of the policy. In light of the failure of the Senate to comes to terms on the Lieberman Warner Climate Security Bill, it will be interesting to see how the Congress receives this report.