Abstract: The Energy Modeling Forum (EMF) 32 study on carbon tax scenarios analyzed a set of illustrative policies in the United States that place an economy-wide tax on fossil-fuel-related carbon dioxide (CO₂) emissions, a carbon tax for short. Eleven modeling teams ran these stylized scenarios, which vary by the initial carbon tax rate, the rate at which the tax escalates over time, and the use of the revenues. Modelers reported their results for the effects of the policies, relative to a reference scenario that does not include a carbon tax, on emissions, economic activity, and outcomes within the U.S. energy system. This paper explains the scenario design, presents an overview of the results, and compares results from the participating models. In particular, we compare various outcomes across the models, such as emissions, revenue, gross domestic product, sectoral impacts, and welfare.

From the Conclusion: In short, the results here are consistent with much of the existing modeling literature on carbon pricing in the United States. Across all models, we find that the core carbon price scenarios lead to significant reductions in CO₂ emissions, with the vast majority of the reductions occurring in the electricity sector and disproportionately through reductions in coal. Emissions reductions are largely independent of the uses of the revenues modeled here. Expected economic costs (not accounting for any of the benefits of GHG and conventional pollutant mitigation), in terms of either GDP or welfare, are modest, but they vary across models and policies. Using revenues to reduce preexisting capital or, to a lesser extent labor taxes, reduces welfare losses in most models relative to providing household rebates, but the magnitudes of the cost savings vary.