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True, but important to note that an INCENTIVE to reduce carbon is not the same as a PENALTY to emit it. The incentive is much more important than the penalty and they are decidedly not equivalent, no matter how many academic economists may tell you otherwise.
The barrier to lowering CO2 isn't asset dispatch, but asset construction. Once you build a zero/low carbon energy source it tends to outcompete traditional sources on the margin because it costs less to run. So the right policy tool is one that leads to new asset construction.
An incentive (a la the trade end of a cap & trade, or RPS or other implicit revenue stream tied to CO2 reduction) makes those clean assets easier to finance and works. A penalty (a la a tax on dirty sources) doesn't differentially change the investment calculus for cleantech
Key point: the purpose of good CO2 policy is not to raise the cost of energy. It is to reduce CO2. Those are not synonymous. A C tax unambiguously does the former but is a very indirect and inefficient way to do the latter.
So while I absolutely support a price on carbon, it's only insofar as that price serves to provide revenue to clean assets tied to their CO2 reduction. A C tax doesn't do that but lots of other carbon market structures do. Let's focus on those. /fin
