The United Nations Intergovernmental Panel on Climate Change’s (IPCC) first assessment report, released in 1990, calculated that carbon dioxide (CO2) emissions had been responsible for more than half of the greenhouse gas effect. As of 2006, the United States, China, and European Union (EU) consume 56% of global CO2 emissions (Brinkley & Less, 2010). Figure 1, below, shows that CO2 levels have continued to rise at basically the same rate since before the 1960s (Tans & Keeling). 23 years later, on September 27, 2013, the IPCC released its fifth assessment report, concluding that climate change is the result of human activity with 95% – 100% certainty (Intergovernmental Panel on Climate Change, 2013). The report claims that an immediate response to this information is necessary to combat the negative effects of climate change, such as extreme weather events, ocean acidification, and other adverse phenomena. Despite knowing of the massive consequences if CO2 emissions cannot be reduced and controlled, the United States has yet to formulate a serious policy aimed at reducing carbon emissions due to a multitude of factors. However, the United States is coming around and the question is no longer if carbon policies need to be created, but how they should be created. To answer the question of how an effective carbon policy must be structured, this paper first examines where policies went wrong to learn from past mistakes, then gathers advice from several policy suggestions. By synthesizing the missteps and successes, an adjustment to a previous model is made to estimate the optimal carbon tax policy. The final section of this paper determines the feasibility of such a policy being enacted in the United States and provides suggestions for further research.

First Advisor

Kate Stirling

Degree Type








Degree Name

Bachelor of Science in Economics

Date of Award

Spring 5-18-2014