Mitigating Greenhouse Gas Emissions: Selected Policy Options

Mitigating Greenhouse Gas Emissions: Selected Policy Options

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March 15, 2021
Mitigating Greenhouse Gas Emissions: Selected Policy Options
Congress may consider a range of policy options that could
emissions; promotes the displacement of higher carbon-
be used to limit or remove human-related greenhouse gas
intensive sources (e.g., fossil fuels) with lower carbon-
(GHG) emissions from the atmosphere, including carbon
intensive sources (e.g., renewables); spurs innovation in
dioxide (CO2), methane, nitrous oxides, and others. Efforts
emission reduction technologies; and stimulates actions that
to reduce net GHG emissions—the sum of direct emission
may decrease emissions, such as efficiency improvements.
reductions/removals and permanent sequestration—are
under way in other countries and in a number of U.S. states
As illustrated in Figure 1, 32 countries and 27 subnational
and localities. This In Focus identifies and briefly describes
governments have carbon price programs in place.
selected policy tools that could reduce net GHG emissions
According to a 2020 World Bank report, a number of
from one or more economic sectors, including electricity,
additional countries are considering carbon price programs.
transportation, industry, agriculture, and commercial and
residential buildings. Some of the policies described below
Technology or Performance Standards
directly impact emissions—for example, through a price or
Policymakers may establish technology standards or
regulation—whereas others address emission levels
performance requirements on a range of emission sources
indirectly. The options below are not an exhaustive list of
or their inputs, such as fuels. Examples of climate-related
policy tools.
technology or performance standards include
GHG Emissions (Carbon) Price
 Corporate Average Fuel Economy (CAFE) and GHG
Governments may place a price on GHG emissions—often
emission standards for motor vehicles; renewable fuels
described as a carbon price—which typically involves
standards or low carbon fuel standards;
either a carbon tax (emissions fee) or an emissions cap-and-
trade system. Both approaches would place a price—
 emission performance standards for electric power
directly or indirectly—on GHG emissions or their inputs,
plants or oil and natural gas production facilities; and
namely fossil fuels. A key difference between these
approaches is that (in general) an emissions cap provides
 energy efficiency standards for consumer products and
certainty about the ultimate emissions level, whereas
industrial equipment; and building codes or standards
taxes/fees provide certainty about the emission price level.
for building components, such as windows and
A carbon price creates a financial incentive to reduce GHG
insulation.
Figure 1. National and Subnational Carbon Pricing Programs

Source: CRS using data from World Bank, “Carbon Pricing Dashboard,” as of November 1, 2020,
https://carbonpricingdashboard.worldbank.org.

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Mitigating Greenhouse Gas Emissions: Selected Policy Options
Electricity Portfolio Standards
electric vehicles, solar panels, or household energy
Renewable portfolio standards and clean energy standards
efficiency improvements. Some taxes, such as the gasoline
aim to change the technologies used to generate electricity.
tax, may discourage the use of particular products that
Portfolio standards establish a minimum amount of
produce GHGs.
electricity generated by specified technologies, such as
Government Procurement
renewable energy, nuclear energy, or other eligible options.
Governments are a major purchaser of materials and goods
Portfolio standards apply across an electricity generating
(e.g., light bulbs, concrete, steel) and lessee of buildings.
system, such as a utility—not to individual power plants.
Policymakers can help drive technological advancement
Thirty states, three U.S. territories, and the District of
through procurement policies, which may include setting
Columbia have mandatory portfolio standards (Figure 2).
GHG or energy performance standards and/or guaranteeing
Figure 2. States and U.S. Territories with Mandatory
purchase of that technology or material at a particular price,
Electricity Portfolio Standards
or by purchasing a less-emitting technology or material.
Policy Options to Increase Carbon Removal
Carbon removal includes a suite of activities that remove
CO2 from the atmosphere and store it underground, in
living organisms, or in certain products. Carbon removal
efforts often involve terrestrial carbon sequestration, in
which naturally occurring processes (e.g., photosynthesis)
store atmospheric carbon in forests, croplands, and other
land types. Carbon removal also may involve emerging
technologies such as direct air capture. Climate mitigation
models generally project that some level of carbon removal
activities will be necessary to achieve net zero emission
goals. A range of policy tools could support carbon removal

efforts, including direct funding, tax incentives, or public
Source: CRS, using data from Database of State Incentives for
investment in R&D. Some carbon removal activities might
Renewables & Efficiency, September 2020, https://www.dsireusa.org.
qualify as emission offsets in a cap-and-trade system or
Emission or Carbon Offsets
voluntary program. Policymakers may support this
An emission (or carbon) offset is a measurable reduction,
inclusion by establishing programs to measure, monitor,
avoidance, or sequestration of GHG emissions from a
and verify the carbon removal of particular activities. In
source not covered by an emission reduction program.
addition, if policymakers establish a carbon tax or fee on
Offset projects often involve land-based activities, such as
emissions, they might consider allotting a portion of the
reforestation or specific agricultural practices. Many
new revenue stream to support carbon removal efforts.
companies and some consumers purchase offsets
Policy Considerations
voluntarily to reduce their net emissions. For example, the
If Members of Congress decide to establish federal
International Civil Aviation Organization established the
programs or policies to mitigate GHG emissions, they may
Carbon Offsetting and Reduction Scheme for International
consider one or more of the above policy approaches. The
Aviation to offset the projected annual increase in total CO2
options described above are not mutually exclusive and
emissions from international civil aviation. Emission offsets
could be combined to address different sectors and GHG
have generated controversy and raised concerns, including
emissions sources, while supporting related objectives.
the credibility of actual emission reductions and
When crafting a climate mitigation approach, Members
environmental justice issues more generally.
may assess a range of potential concerns and how particular
Public Investment in Research and Development
policies could be designed to address them. In particular,
Technological advances in both energy services and
Members may consider policy design options that help
industrial processes can help address a range of objectives,
alleviate some of the expected consequences of mitigation,
including climate change mitigation. In general, economists
which may include economy-wide impacts,
contend that the private sector limits investment in research
disproportionate costs to lower-income households, job
and development (R&D), because companies cannot
losses in certain industries, or impacts to carbon-intensive,
capture all the benefits of their investments. The federal
trade-exposed industries. They also may consider the trade-
government has played an important role in supporting
off between estimated mitigation costs with the benefits of
avoiding climate change, as well as “co
R&D efforts that have led to scientific breakthroughs and
-benefits,” such as
new technologies across a range of sectors. Through this
air pollution reductions, relative to the estimated costs to
support, governments can play a role in shaping the
society of taking no action. In addition, Members may
direction and pace of technological developments.
consider how policies would foster international
cooperation or enhance competition.
Tax Policies
Tax credits or other types of tax incentives can encourage
Jonathan L. Ramseur, Specialist in Environmental Policy
business investment in certain GHG-mitigating
Genevieve K. Croft, Analyst in Agricultural Policy
technologies, such as renewable energy generation or
Corrie E. Clark, Analyst in Energy Policy
carbon capture and sequestration, accelerating their
Ashley J. Lawson, Analyst in Energy Policy
adoption. Likewise, governments use tax policies to
encourage consumers to purchase certain products, such as
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Mitigating Greenhouse Gas Emissions: Selected Policy Options

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