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TITLE: CEEN IA7290: CARBON PRICING

SEMESTER: Fall 2025

SCHEDULE: Monday 5:10pm‐7:00pm

LOCATION: International Affairs Building (IAB) 501B

INSTRUCTOR: Ruben Lubowski

EMAIL: [email protected]

OFFICE HOURS: To be announced

CREDITS: 3

Course description:

Carbon pricing has become a central tool in global climate policy, with over 70 jurisdictions

implementing carbon taxes or emissions trading systems that now cover more than one quarter

of global emissions. Existing programs are under reform and expansion while new programs are

under development across every continent.

Carbon pricing is becoming increasingly entwined

with international trade and there is growing interest from companies and investors in carbon

and carbon regulations as a source of risk and potential opportunities. This course explores how

carbon markets and taxes are designed, reformed, and evaluated, using real-world case studies

from Europe, the Americas, Asia, and beyond.

Students will follow a structured, step-by-step

framework for designing effective carbon pricing policies across sectors, including energy,

transportation, industry, and land use.

The course examines market-based policies, including

emissions trading systems (cap-and-trade), carbon taxes, and crediting (“offset”) programs, as

well as emerging debates around integrity and equity.

Students will consider the role of carbon

pricing within the climate policy toolkit and learn design principles and tradeoffs, common

challenges, perspectives of key stakeholders, and lessons learned to date. Topics also include

the intersection of pricing with complementary policies, carbon border adjustments, voluntary

markets, corporate climate strategies, natural climate solutions, and modeling frameworks to

inform policy and market choices.

By the end of the course, students will have evaluated and

critiqued existing and proposed policies, developed novel policy proposals, and be prepared to

understand, navigate, and potentially shape future carbon pricing innovations.

Recommended prerequisites:

While the class is suitable for a broad range of backgrounds and there are no required

prerequisites, the ideal preparation includes INAF U6071/CEEN IA7200 Fundamentals of

Environmental Policy or other introductory course in environmental economics and policy.

Principal texts (available online):

Partnership for Market Readiness; International Carbon Action Partnership. 2016. Emissions

Trading in Practice: A Handbook on Design and Implementation. World Bank, Washington, DC.

Partnership for Market Readiness; International Carbon Action Partnership. 2021. Emissions

Trading in Practice: A Handbook on Design and Implementation, Second Edition. World Bank,

Washington, DC.

Partnership for Market Readiness. 2017. Carbon Tax Guide: A Handbook for Policy Makers.

World Bank, Washington, DC.

Additional journal articles, reports and primary-source readings will be posted online.

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Grading:

Grades for the course will be based on three components, as follows:

1) Class participation (15% of total grade). Regular attendance and active class participation will

be an important element of this class. Students are expected to have done the readings for

each lecture before class and to contribute to class discussions, making relevant comments and

asking questions that enhance the quality of the class experience for themselves and others.

If

you miss class due to a medical emergency, please provide a doctor's note.

2) Three individual short assignments, each worth 15% (45% of total grade). There will be three

short (3-5 page) papers critically evaluating real-world policies, either implemented or proposed.

Papers are always due at the beginning of class. No late assignments will be accepted.

i. The first paper will consider an actual proposal for a carbon tax.

ii. The second paper will consider an actual proposal for an emissions trading program.

iii. The third paper will be a case study of an actual policy implemented in the past.

This

assignment will be due on different days for different teams of students.

Students will be

divided into small groups, each assigned to one of 6 case studies to be discussed by the

class.

Papers and presentations will be individual but students are encouraged to work

together as a study group to plan their papers and presentations.

3) Team project and presentation (40% of total grade).

There will be a final team project in

which students will divide into four teams to develop a novel policy proposal, write a paper about

it (15-20 pages), and deliver an in-class presentation (25 minutes) at the end of the semester.

Students will choose from a list of topics provided or develop their own topic with the permission

of the professor. The choice of topics must be finalized by week 7.

If you feel that part of your assignment was overlooked or otherwise graded it incorrectly, please

send a written note about what you feel should be regarded within two weeks from when the

assignment was returned. Once the two weeks have passed, you forfeit the right for a re-grade.

SIPA Academic Integrity Statement:

The School of International & Public Affairs does not tolerate cheating and/or plagiarism in any

form. Those students who violate the Code of Academic & Professional Conduct will be subject

to the Dean’s Disciplinary Procedures.

Please familiarize yourself with the proper methods of citation and attribution. The School

provides some useful resources online; we strongly encourage you to familiarize yourself with

these various styles before conducting your research. Cut and paste the following link into your

browser to view the Code of Academic & Professional Conduct and to access useful resources

on citation and attribution: http://bulletin.columbia.edu/sipa/academic-policies/

Violations of the Code of Academic & Professional Conduct should be reported to the Associate

Dean for Student Affairs.

SIPA Disability Statement:

SIPA is committed to ensuring that students registered with Columbia University’s Disability

Services (DS) receive the reasonable accommodations necessary for their full participation in

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their academic programs. If you are a student with a disability and have a DS-certified

accommodation letter, you may wish to make an appointment with the course instructor to

discuss your accommodations. Faculty provide disability accommodations to students with DS- certified accommodation letters, and they provide the accommodations specified in such

letters.

If you have any additional questions, please contact

Class Schedule:

Below is a preliminary course outline that is subject to change. Sections may be extended or

abbreviated, according to the progress of the class. In the last column of the table, ETP and

CTG refer to Emissions Trading in Practice and Carbon Tax Guide, respectively, and numbers

refer to chapters. Additional journal articles, policy reports and primary source readings will be

posted over the course of the term. An indicative list of readings follows the table below.

Week-by-Week List of Class Topics (subject to modification)

Date Topic (key concepts)

Textbook chapters

(readings and case study

materials to be posted)

Week 1:

Sept. 8

Introduction to the class and to carbon pricing.

Overview of existing and emerging carbon pricing

initiatives around the world and of history of relevant

international climate policy developments (e.g. Paris

Agreement).

ETP (Synthesis), CTG (1)

Week 2:

Sept. 15

Laying the foundation for carbon pricing: Setting ETS

objectives and managing policy interactions. Economics

and political economy alternative policy instruments.

Evidence on carbon market and carbon tax impacts.

ETP (Before you Begin),

CTG (Ch. 2, 3)

Week 3:

Sept. 22

Deciding the scope of the program (covered sectors,

greenhouse gases, point of regulation, thresholds).

Modeling tools and frameworks.

ETP (1), CTG (4, 5),

Week 4:

Sept. 29

Setting the cap and/or tax levels.

Social cost of carbon.

Relationship to climate and carbon finance and recent

developments.

ETP (2), CTG (6), Case

study #1.

Week 5:

Oct. 6

Guest speaker (TBC).

Private regulated entity perspective.

Paper # 1 due.

Week 6:

Oct. 13 Distributing allowances and determining use of revenues.

ETP (3), CTG (7, 8), Case

study #2.

Week 7:

Oct. 20

Considering use of offsets and experience with emissions

reduction crediting systems.

Carbon pricing strategies to reduce deforestation and

address emissions from the land sector.

ETP (4), Final project

topics due, Case study #3

Week 8:

Oct. 27

Address temporal flexibility, price predictability and cost

containment.

Derivatives and futures markets.

ETP (5, 6), Paper # 2

due.

Nov. 3 Academic Holiday

Week 9:

Nov. 10

Ensuring compliance and oversight. Monitoring reporting

and verification systems.

Oversight and regulation.

ETP (7), CTG (9), Case

study #4

Week 10:

Nov. 17

Market linkages and international cooperation:

opportunities and challenges.

ETP (9), Case study #5

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Week 11:

Nov. 24

Engage stakeholders and build capacity. Market

infrastructure requirements.

ETP (8), Case study #6

Week 12:

Dec. 1 Implementation phases, program evaluations and revision.

ETP (10), CTG (10)

Week 13:

Dec. 8 Final team project presentations.

In-class presentation and

papers due.

Indicative Supplemental Readings (subject to change, please check course site)

Week 1: Introduction

Chapter 1, “Introduction,” World Bank. 2023.State and Trends of Carbon Pricing 2023

State

and Trends of Carbon Pricing (June), World Bank, Washington, DC.

Chapter 2, “Carbon Taxes and Emissions Trading Systems,” World Bank. 2023.State and

Trends of Carbon Pricing 2023

State and Trends of Carbon Pricing (June), World Bank,

Washington, DC.

Week 2: Laying the foundation for carbon pricing

Aldy, Joe and R. Stavins. 2012.

“The Promise and Problems of Pricing Carbon: Theory and

Experience.” Journal of Environment & Development.” 21(2) 152–180.

Narassimhan, Easwaran, Kelly S. Gallagher, Stefan Koester and Julio Rivera Alejo. 2018.

“Carbon pricing in practice: a review of existing emissions trading systems.” Climate Policy,

18(8): 967-991.

Week 3: Deciding the scope of the program

Burtraw, Dallas and Samantha Sekar. 2013. “Two World Views on Carbon Revenues.” Journal

of Environments Studies and Sciences, 4:110–120

Stavins, Robert. 2019. “The Future of U.S. Carbon-Pricing Policy.” Discussion Paper 2019-81.

Cambridge, MA. Harvard Environmental Economics Program.

Week 4: Setting the cap and/or tax levels.

British Columbia carbon tax case study.

Chapter 4 on “Climate finance and climate markets: toward an integrated approach”, World

Bank, Ecofys and Vivid Economics. 2017. State and Trends of Carbon Pricing 2017

(November).

World Bank, Washington, DC.

Week 5: Guest speaker (TBD) and private regulated entity perspective

Peel, Jacqueline. 2014. “The Australian Carbon Pricing Mechanism: Promise and Pitfalls on the

Pathway to Clean Energy Future,” The Minnesota Journal of Law, Science & Technology,

15(1): 429-466.

Chapter 4, “Internal carbon pricing,” World Bank. 2020. State and Trends of Carbon Pricing

2020

State and Trends of Carbon Pricing (June), World Bank, Washington, DC.

CDP. 2017. Putting a Price on Carbon: A Handbook for Indian Companies. London, UK.

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Week 6: Distributing allowances and determining use of revenues.

California cap & trade program case study.

Climate Leadership Council (James A. Baker III et al.).

2017.

“The Conservative Case for

Carbon Dividends.”

Week 7: Consider use of offsets

Schwartzman, Stephan, Ruben N. Lubowski, Stephen W. Pacala, Nathaniel O. Keohane, Suzi

Kerr, Michael Oppenheimer and Steven P. Hamburg. 2021. “Environmental integrity of

emissions reductions depends on scale and systemic changes, not sector of origin.”

Environmental Research Letters 16.

Ward, John, Christine Gerbode, Britta Johnston and Suzi Kerr. 2024. “Markets for NCS Credits- domestic and international,” Chapter 4, Advancing Effective and Equitable Crediting: Natural

Climate Solutions Crediting Handbook.

Environmental Defense Fund, New York, NY.

Week 8: Temporal flexibility

Achim Lerch and Sven Rudolph.

2016. “Just ETS? Social justice and recent reforms in EU and

US carbon markets.” Ch. 14. Stoianoff et al. eds. Market Instruments and the Protection of

Natural Resources.

Schmalensee, Richard, and Robert N. Stavins. 2013. “The SO2 Allowance Trading System: The

Ironic History of a Grand Policy Experiment.” Journal of Economic Perspectives 27(1): 103-

122.

Narassimhan, E., Gallagher, K. S., Koester, S. and Rivera Alejo, J. 2017. Carbon Pricing in

Practice: A Review of the Evidence. Medford, MA. Climate Policy Lab.

Week 9: Compliance and oversight

Patrick Bayer and Michaël Aklin. 2020. “The European Union Emissions Trading System

reduced CO2 emissions despite low prices.”

Proceedings of the National Academies of

Science.

117 (16) 8804-8812.

Campos, Pam. 2016. “Compliance Tools for a Global Market Based Measure for Aviation ∙

Compliance Tools for a Global Market Based Measure for International Aviation.” Carbon &

Climate Law Review 10 (2): 153-163.

Schmalensee, Richard and Robert N. Stavins. 2017. “Lessons Learned from Three Decades of

Experience with Cap and Trade.” Review of Environmental Economics and Policy 11(1): 59- 79.

Week 10: Linkages

Leining, Kerr and Bruce-Brand. 2020. “The New Zealand Emissions Trading Scheme: critical

review and future outlook for three design Innovations.” Climate Policy 20 (2): 246-264.

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Schneider et al. 2019. “Double Counting and the Paris Agreement Rulebook.” Science 366

(6462).

Articles 5-6. "Paris Agreement". United Nations Treaty Collection. 8 July 2016.

Stavins, R. N., Michael A. Mehling, and Gilbert E. Metcalf. “Linking Climate Policies to Advance

Global Mitigation.” Science 359 (2018): 997–998.

Green, Jessica F., Thomas Sterner and Gernot Wagner. 2014. “A balance of bottom-up and

top-down in linking climate policies.” Nature Climate Change 4, 1064-1067.

Week 11: Engage stakeholders, build capacity, and market infrastructure requirements.

Stoerk, Thomas, Dan Dudek, and Jia Yang. 2020. “China’s national carbon emissions trading

scheme: lessons from the pilot emission trading scheme, academic literature, and known

policy details.” Climate Policy 19 (4): 472-486.

Executive Summary from Partnership for Market Readiness (PMR), Carbon Pricing Leadership

Coalition (CPLC), 2018. Guide to Communicating Carbon Pricing. Washington, DC.

Week 12: Implementation phases, program evaluations and revision

Ball, Jeffrey. 2018. “Why Carbon Pricing Isn’t Working: Good Idea in Theory, Failing in

Practice.” Foreign Affairs, July/August.

Haites, Erik. 2018. “Carbon taxes and greenhouse gas emissions trading systems: what have

we learned?” Climate Policy, 18 (8): 955-966

Döbbeling-Hildebrandt, Niklas et al. 2024. “Systematic review and meta-analysis of ex-post

evaluations on the effectiveness of carbon pricing.” Nature Communications, 15: 4147

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