What is a major equity concern related to carbon pricing?

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BlackTom AI · Accepted Answer

Question: What is a major equity concern related to carbon pricing?

Option 1: 'It only benefits wealthy countries' — This is an overgeneralization. Carbon pricing can affect economies differently, but the concern is not that it only benefits wealthy countries; many factors influence distribution of benefits and costs, including policy design, revenue recycling, and international support. This statement mischaracterizes the scope and impact of carbon pricing.

Option 2: 'It raises energy costs for low-income households' — This captures a core equity concern. Carbon pricing increases the price of energy and goods that rely on fossil fuels, which can disproportionately burden low-income households that spend a larger share of their income on energy and essentials. The fairness issue arises if the policy does not offset these costs through targeted rebates, assistance programs, or equalizing measures.

Option 3: 'It leads to more fossil fuel use' — Carbon pricing is intended to discourage fossil fuel use by raising its cost relative to cleaner options. While there can be design challenges or loopholes, the standard goal is to reduce, not increase, fossil fuel consumption. This makes the statement incorrect as a general claim about carbon pricing.

Option 4: 'It reduces air pollution in wealthy areas only' — This is misleading. Carbon pricing can influence emissions broadly across regions and populations, not just wealthy areas. While distributional effects exist, the mechanism is not inherently limited to wealthy areas, and outcomes depend on where emissions are concentrated and how revenues are utilized. The claim oversimplifies geographic and demographic impacts.

In summary, the statement in Option 2 aligns with widely discussed equity concerns about carbon pricing, namely the potential for energy and living costs to rise for low-income households unless mitigation strategies are implemented. The other options either overgeneralize, misstate the policy’s intent, or mischaracterize its effects on emissions and populations.

MGMT 297 03 Readiness Quiz- Conventional Energy

What is a major equity concern related to carbon pricing?

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