A federal carbon tax would be a significant step toward slashing greenhouse gas emissions in the United States, but adding a carbon tax to current policies is insufficient to achieve an emissions target at the lowest cost. Policymakers should examine whether other new policies are needed alongside a carbon tax and whether existing policies should be changed or eliminated.

To provide policymakers with information to help make these decisions, we developed a framework for considering the interactions between a federal carbon tax and other policies that influence greenhouse gas emissions. We identify policies and programs that are “complementary” or “redundant" to a carbon tax.

A policy is defined as complementary if it:

1. enables more cost-effective reductions of greenhouse gas emissions than a carbon tax would achieve on its own; or

2. reduces greenhouse gas emissions and achieves a separate policy objective more cost-effectively than a federal carbon tax would on its own.

Conversely, a policy is defined as redundant with a federal carbon tax if it leads to additional costs to society without achieving additional emissions reduction.

Real-world policies often do not fall cleanly into either category and neither specifying the framework nor making the categorizations is an exact science. It is often difficult to identify a policy’s objective or evaluate its cost-effectiveness. In addition, the extent to which a policy complements a carbon tax depends on the nature of the carbon tax. Most obviously, with a lower carbon tax rate, fewer emission reductions would be achieved, and additional policies may be needed to make up the difference between the outcome and a science-based emissions reduction target.

The following table uses our framework to characterize policies that reduce greenhouse gas emissions. By putting your cursor over the policy category, you will find a short rationale for the characterization. More information can be found in the full report here.