Challenges in carbon pricing experiments
Carbon pricing experiments, primarily targeting large corporations in the EU[1] and select US states[2], have yielded controversial results.
To date, carbon pricing initiatives have imposed relatively modest penalties. Most corporations opt to pay these fees and pass the costs onto consumers, rather than investing in costly green technologies. If companies were to invest in reducing their reliance on fossil fuels, it would likely raise production costs, risking a loss of market share to competitors who choose to pay the lighter penalties. In either scenario, the financial burden ultimately falls on end users, including low-income households.
Given that current carbon pricing experiments have yet to demonstrate effective change without merely shifting costs to consumers, governments are hesitant to fully enforce this approach. This reluctance has led to a more passive stance in accelerating the green transition, with governments opting to wait for the prices of green products to decrease instead.