Distributional Considerations in Climate Change Mitigation: Policy Design as if the Present Generation Matters

The case for climate policy typically is made on grounds of inter-­‐generational equity,with a presumed tradeoff between the environmental interests of future generations and the economic interests of the present generation.This framing of the problem neglects the scope for designing effective climate policies that yield net benefits for all or most people who are alive today. This paper considers two ways in which climate policy can bring substantial immediate gains,via the air quality co-­‐benefits from reduced use of fossil fuels;and the recycling of rent created by carbon pricing. Both pose important issues of distributional equity within the present generation.