Reducing Greenhouse Gas Emissions

As states deal with climate change, many seek economically efficient ways to reduce greenhouse gas emissions. The most popular market-based approach, cap and trade—which limits greenhouse gas emissions and allows emitters to trade allowances—now is being implemented in more than 10 states. Despite the popularity of cap and trade, many economists think a carbon tax is the least costly and simplest approach. Although few states have considered a carbon tax, San Francisco, Calif., and Boulder, Colo. have created small carbon taxes.