In Massachusetts, researchers at MIT and the National Renewable Energy Laboratory conducted an extensive analysis of several proposals and concluded that putting a price on carbon, in the form of a fee or tax on the use of fossil fuels, coupled with returning the generated revenue to the public in one form or another, can be an effective way to curb emissions of greenhouse gases.
Depending on the exact mechanism chosen, such a tax can also be fair and not hurt low-income households, according to the researchers.
The analysis was part of a multi-group effort to apply sophisticated modeling tools to assess the impacts of various proposed carbon-pricing schemes. Eleven research teams at different institutions carried out the research using a common set of starting assumptions and policies. While significant details differed, all the studies agreed that carbon taxes can be effective and, if properly designed, need not be regressive.