Title page 1

Contents 6

Acknowledgements 2

Executive Summary 3

1.0. Context 7

2.0. Methodology 9

2.1. The Scenarios 9

2.2. Assumptions, Limitations, and Notes for Interpretation 10

3.0. Key Findings 12

3.1. A Strong and Rising Industrial Carbon Price Drives New Investment in Clean Projects and Achieves Significant Emissions Reductions... 12

3.1.1. Emissions Reductions 12

3.1.2. Economic Impacts 13

3.1.3. Investment 16

3.1.4. Comparing Price Trajectories: High vs low 16

3.2. Tightening Performance Standards Relatively More Quickly in Sectors That Are Less Exposed to International Competition-Such as Oil... 17

3.2.1. Differentiated Tightening Rates for Performance Standards 17

3.2.2. Other Design Elements 18

3.3. While a Strong and Rising Industrial Carbon Price Triggers Meaningful Emissions Reductions With Minimal Impacts on Economic Growth,... 19

3.3.1. Emissions Reductions in Non-Industrial Sectors 19

3.3.2. Emissions Reductions in Industrial Sectors 20

4.0. Recommendations 21

References 23

Figure 1. Industrial carbon price trajectories 10

Figure 2. Emissions in different price scenarios 13

Figure 3. Emissions vs GDP: High-price scenario 14

Figure 4. GDP growth continues in all price scenarios, with only minimal impacts from higher prices 14

Figure 5. A high carbon price results in greater annual investment 16

Figure 6. Net increase in jobs after adjusting tightening rates in high-price scenario 18

Figure 7. Emissions reductions by sector in high-price scenario 19