ECONOMIC REPORT OF THE PRESIDENT

sector, the fee would incentivize private-sector innovation and investment
in clean transportation technologies. A portion of the fee would also be
directed to provide relief to vulnerable households.
In 2009, the President urged Congress to pass an energy bill that would
have used market-based mechanisms to incentivize a clean energy transformation
(Obama 2009). A bill with a proposed national cap-and-trade system
passed in the House but was not voted on in the Senate (Walsh 2010). While
over the President’s terms the Administration has pursued a number of policies
that indirectly price carbon-emitting activities, going forward, a widely
held view across a broad spectrum of economists is that policies that put a
direct, uniform price on carbon are the most efficient and comprehensive
way to both meet the goals set forth in the Paris Agreement and to efficiently
transition to a clean energy economy. Even with a comprehensive national
carbon price, some additional Federal climate policies (such as investments
in clean energy research and development) would likely still be efficient.
Conclusion
As discussed in this report, the costs of climate change are large, the
impacts are being felt now, and they will intensify in the future. Further,
delaying policy action designed to halt climate change will likely increase
its costs. There is strong economic rationale for policies to address climate
change based on both correcting a market failure from the negative externality
produced by greenhouse gas emissions, and as a form of insurance
against catastrophes caused by global warming. Since the President took
office in 2009, the United States has taken numerous steps to both mitigate
climate change and respond to its effects. The Administration leveraged
a diverse set of policy mechanisms, from tax credits for renewable energy
technologies to the first-ever greenhouse gas emission standards for
vehicles and power plants, to pivot the nation toward a greener and stronger
economy while recovering from the Great Recession. With the implementation
of these policies, renewable energy technology costs have declined,
and deployment of clean energy technologies has increased. With the
implementation of Administration policies, and with a concurrent increase
in supply and decrease in the cost of natural gas, the carbon intensity of our
electric portfolio has decreased, and the overall energy and carbon intensity
of the economy has declined. All of these changes in the U.S. energy system,
favorable to climate change mitigation, have occurred while the economy
has grown.
Although the progress made to date in transitioning toward a cleanenergy
economy since 2009 presents only a portion of the Administration’s
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