China rivalry helps drive US carbon pricing debate

Financial Times

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Welcome back. Economists have long viewed international carbon pricing as one of the most important policy tools — arguably the most important — in the fight against climate change. The EU has been the key mover so far, with a long-standing industrial carbon trading scheme and an incoming levy on carbon-intensive imports.

Now, momentum is growing around a similar move by the US, as was clear from the conversation that FT climate correspondent Attracta Mooney and I had in London with John Podesta, the White House senior adviser on international climate policy. Such a step could be a major development for the global energy transition — even if it’s the US economic rivalry with China that gets it over the line.

Carbon pricing US looks beyond its borders in new approach to carbon pricing

Joe Biden’s weak performance at Thursday’s debate with Donald Trump has added weight to predictions that his administration is now entering its final months.

But our conversation with John Podesta underscored the growing political support in the US around carbon pricing, especially on imported goods. The momentum could conceivably grow even under a second Trump administration, thanks to the bipartisan concern about Chinese industrial competition.

So far, the Biden White House appears to have made a conscious decision not to prioritise a national carbon pricing system, as has now been rolled out in various forms in most other high-income economies and in China. That concept has long been seen as politically toxic in the US, the world’s biggest oil and gas producer. Biden’s clean energy strategy has put much more emphasis on carrots than on sticks, notably through the lavish incentives proffered under the Inflation Reduction Act.

But Podesta made clear that carbon pricing in international trade is now a focus for the administration. “The global trading system doesn’t properly take account of embodied carbon in tradable goods,” said Podesta, who announced a new “task force” to tackle this issue in April. “So we’re undertaking a review of that, trying to deepen the data that we are going to need to implement a policy framework for

The full article is available here. This article was published at FT Markets.