A new study indicates that the United States will need both green subsidies and carbon pricing to achieve net-zero greenhouse gas emissions by 2050. While subsidies can initially reduce emissions, they alone are insufficient without eventual taxes on carbon. Inconsistent policies across administrations could make the transition slower and more costly.
Reaching net-zero emissions in the US by 2050 demands a combination of incentives and penalties, according to modeling by Wei Peng at Princeton University and her colleagues. Their research, published in Nature Climate Change, explores various policy sequences to decarbonize the economy.
Subsidies, described as 'carrots,' can lower the costs of low-emission technologies such as electric vehicles and make carbon pricing more palatable. The study found that these measures could cut energy system emissions by 32 percent before 2030. However, their impact wanes afterward, as fossil fuels like natural gas remain competitively priced.
In contrast, imposing a carbon price or tax— the 'sticks'—proves more effective for deep cuts. A scenario with subsidies followed by a carbon price in 2035 would phase out most fossil fuels, reducing emissions by over 80 percent by 2050. 'Carrots can help grow green industry, but we still need sticks to really reach decarbonisation goals,' Peng stated. The US has repeatedly failed to enact cap-and-trade legislation, which would cap emissions and require excess emitters to buy allowances.
Policy inconsistency exacerbates challenges. Under President Joe Biden, laws funded green infrastructure like electric vehicle charging and offered tax rebates for technologies including hydrogen production and carbon sequestration. President Donald Trump, however, called these a 'green new scam' and canceled many. Peng described such flip-flopping as the 'worst case' scenario, slowing decarbonization or increasing its expense.
If subsidies resume after Trump's term ends in 2029 and a carbon price starts in 2045, that price would need to be 67 percent higher than if implemented now, partly due to reliance on costly carbon dioxide removal technologies. The researchers suggest that accelerated innovation from breakthroughs could reduce the need for stringent pricing.
Gregory Nemet at the University of Wisconsin-Madison praised the work as a 'call for carbon pricing' but recommended extending the model to other nations. China and the European Union combine subsidies and pricing, driving innovations like cheap solar panels that benefit global emission reductions. 'Progress continues in those places; policy continues,' Nemet said.
