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Carbon Pricing As Financial Risk Management – If It Is Inclusive Enough . .

Barry Dicker's picture
President, Decent Energy, Inc.

Barry Dicker is the President of Decent Energy, Inc., a forward-thinking company based in Overland Park, Kansas, that integrates energy efficiency and renewable energy solutions.  Barry’s work...

  • Member since 2017
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  • Sep 10, 2020

As discussed by the #NewYorkTimes (, today's report from the #CommoditiesFuturesTradingCommission #CFTC underscores need for Carbon pricing as a tool for harnessing market forces to address impending risk.

This is particularly timely in light of the #FERC announcement of an upcoming conference on Carbon pricing, which is being criticized for a lack of inclusivity. ( Question as to the extent to which FERC will take notice of the CFTC’s findings - particularly that "policymakers must be sensitive to the distributional impacts of carbon pricing and other policies and ensure that the burden does not fall on low-to-moderate income households and on historically marginalized communities."

Also highlighting the need for an inclusive approach, new research later this week from #ACEEE is expected to demonstrate that #lowincome households, as well as #Black#Hispanic, and #NativeAmerican households, pay a disproportionately larger share of their income on energy bills as compared to the average household.

Matt Chester's picture
Matt Chester on Sep 10, 2020

policymakers must be sensitive to the distributional impacts of carbon pricing and other policies and ensure that the burden does not fall on low-to-moderate income households and on historically marginalized communities.

This is such an important and true point, but it would be disingenuous to use it as a reason to throw out any and all carbon pricing. Carbon pricing policies need to be built smartly and deliberately, but I fear those who stand to lose because of carbon pricing will hammer home the equity issues (which are valid issues) without looking to work towards a solution where carbon pricing can build in mechanisms to offset those potential negative impacts. 

Richard Brooks's picture
Richard Brooks on Sep 13, 2020

There is empirical evidence from Alberta showing that Carbon Pricing fails to deliver on its promise to rapidly increase clean energy solutions and raises energy costs to consumers, even as consumption drops. The CFTC report fails to consider other options to address climate change, focusing solely on Carbon Pricing as the "prudent" approach, as shown in the following excerpt.

"But, because the future is very uncertain, society today should err on the side of caution. In the context of pricing climate risk, that implies imposing a higher price than what models used to calculate the social cost of carbon currently suggest. Prudent risk management calls for immediately implementing carbon pricing globally to quickly reduce GHG emissions and to try to get the planet to net-zero emissions as soon as possible while ensuring that the costs are shared equitably across society and that the distributional impacts are not regressive. Of course, policy should respond to new information over time, and it is very likely that circumstances will require that we need to go beyond net-zero and pull greenhouse gases out of the atmosphere."

If the goal is to genuinely mitigate the effects of climate change, there are indeed other, more effective, options to consider

Barry Dicker's picture
Thank Barry for the Post!
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