ABSTRACT
This chapter offers a way to think about when it makes sense for regulations at both the national and state or local level to coexist with a carbon tax. A carbon tax is expected to be the most efficient instrument available for reducing emissions. However, a carbon tax is politically plausible because of its ability to generate revenue to contribute to the substantial revenue needs of the federal government. National energy policy focused on the electricity sector is multifaceted with several policies that are motivated in part by a desire to reduce greenhouse gas emissions. A renewable portfolio standard (RPS) focuses on mandating renewables production instead of on reducing their costs. An RPS specifies the minimum share of electricity sales that must be produced using qualified renewables. In 2007 the United States Supreme Court affirmed the authority of Environmental Protection Agency (EPA) to regulate greenhouse gases under the Clean Air Act.
