Mattauch et al. (2020) claims that the quantitative conclusions in Lemoine and Rudik (2017)—henceforth, LR17—are not robust to using a climate model consistent with recent scientific results. We observe that LR17 in fact analyzes an extension to a more realistic carbon model that generates an efficient emission tax trajectory very similar to that in Mattauch et al. (2020), and we here show that simplifications in the temperature model of LR17 do not qualitatively affect their policy conclusions. Accounting for inertia reduces the initial emission tax by 42 percent and reduces the present value of abatement cost by 39 percent.

Common views hold that the efficient way to limit warming to a chosen level is to price carbon emissions at a rate that increases exponentially. We show that this Hotelling tax on carbon emissions is actually inefficient. The least-cost policy path takes advantage of the climate system's inertia to delay reducing emissions and allow greater cumulative emissions. The efficient carbon tax follows an inverse-U-shaped path and grows more slowly than the Hotelling tax. Economic models that assume exponentially increasing carbon taxes are overestimating the cost of limiting warming, overestimating the efficient near-term carbon tax, and overvaluing technologies that mature sooner.