Institute Instituteofof
Global GlobalAffairs Affairs
Yur big concern is that, despite good despite good intentions, intentions, governments and governments and business business will be be severely severely constrained will constrained in their their spending spending once in once the the immediate crisis immediate crisis is is over, over, due due to the the extraordinary extraordinary financial to financial burden of burden of the the lockdown. lockdown.
emitters (and even different more expensive than it needsemissions to be. from the same emitter) vastly A COVID-19-related general increase differently. This makes in carbon pricing couldcarbon be used to regulation inefficient therefore rectify some of these and differences. more expensive than it needs to be. To successfully implement this policy A COVID-19-related general increase in the future will need a cross-party in carbon pricing be in used consensus. This iscould feasible theto UK rectify some of these differences. as the Conservatives have recently To successfully this policy committed to theimplement net zero carbon in the future will need a cross-party target by 2050 and Labour has been consensus. This is feasible in the UK championing climate change action as the Conservatives have recently over recent decades. committed to the the net government’s zero carbon Is paying down target by 2050 and Labour has been COVID-19 debt the best use for the championing climate change action carbon tax revenue? We think so, as over recent decades. this could be part of a new “Marshall Is paying down the government’s Plan for Growth” after the pandemic, COVID-19 debt the best use for the one that is tilted towards the green carbon tax revenue? We think so, as transition. By providing an additional this could be part of a new “Marshall form of tax revenue, this opens fiscal Plan for Growth” after the pandemic, space for governments to rise to one that is tilted towards the green the challenge of rebuilding our transition. By providing an additional shattered economy. ◆ form of tax revenue, this opens fiscal space for governments to rise to the challenge of rebuilding our This post represents the views of the authors shattered economy. ◆
and not those of the COVID-19 blog, nor LSE.
Success Success will willin inpart partdepend depend on on how how fairly fairlythe thecarbon carbontax tax is is implemented implementedas aswell wellas as how how it it is is communicated. communicated.For For fairness, fairness, we wemust mustaddress addressthe the distributional distributionalimpact impactof ofcarbon carbon pricing pricing to to avoid avoidthe thepoor poorbeing being hit hit harder harderthan thanthe therich. rich.
This post represents the views of the authors and not those of the COVID-19 blog, nor LSE.
John JohnVan VanReenen ReenenisisRonald RonaldCoase CoaseSchool School Professor Professorat atthe theLondon LondonSchool SchoolofofEconomics Economics and andthe theGordon GordonBillard BillardProfessor Professoratatthe the Massachusetts MassachusettsInstitute Institutefor forTechnology Technology(jointly (jointly in the MIT Economics Department and in the MIT Economics Department andSloan Sloan Management ManagementSchool). School). He Hehas haspublished publishedover over aahundred hundredpapers paperson onmany manyareas areasin ineconomics economics with a particular focus on firm performance with a particular focus on firm performance and the causes and consequences of innovation. and the causes and consequences of innovation. He was the 2009 winner of the Yrjö Jahnsson He was the 2009 winner of the Yrjö Jahnsson Award (the European equivalent of the Clark Award (the European equivalent of the Clark Medal); the Arrow Prize (2011); the European Medal); the Arrow Prize (2011); the European Investment Bank Prize (2014), and the Investment Bank Prize (2014), and the HBR-McKinsey Award (2018). He is a fellow of HBR-McKinsey Award (2018). He is a fellow of the British Academy, the Econometric Society, the British Academy, the Econometric Society, the NBER, CEPR and the Society of Labor the NBER, CEPR and the Society of Labor Economists. In 2017, he was awarded an OBE Economists. In 2017, he was awarded an OBE for “services to public policy and economics” for “services to public policy and economics” by the Queen. by the Queen. Ralf Martin is an Associate Professor of Ralf Martin is an Associate Professor of Economics at Imperial College Business Economics at Imperial College Business School and the Director of the Growth School and the Director of the Growth Research Programme at the Centre for Research Programme at the Centre for Economic Performance of the London School Economic Performance of the London School of Economics. His research - which has of Economics. His research - which has appeared in leading economic journals - focuses appeared in leading economic journals - focuses on the relationship between firm performance, on the relationship between firm performance, economic growth and our impact on the natural economic growth and our impact on the natural environment. In 2015 he was the joint winner environment. In 2015 he was the joint winner of the Erik Kempe Award for the best paper in of the Erik Kempe Award for the best paper in Environmental and Resource Economics. Environmental and Resource Economics.
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