The report notes that several commentators have argued that a single, economy-wide carbon price is the most effective way of addressing the climate change challenge. However, although carbon pricing has an important role to play, it is far from sufficient on its own to bring forward investment and accelerate cost reductions in emerging renewable technologies, or to avoid lock-in to high carbon infrastructure.
Dr Rob Gross, Director of the Imperial College Centre for Energy Policy and Technology, said: "There is a notion, popular amongst some energy economists, that carbon pricing is the only policy we need in order to save the planet. This is so simplistic it is absurd. Renewable energy in particular needs the policies that are investment grade. Only then will we get costs down and create a cleaner and more secure energy system.
"Investing in large-scale wind is not the same as investing in small-scale wind or solar and neither is it the same as investing in gas. We need horses for courses in our energy policy. The government understands this but is often being urged to take a different approach in order to simplify energy policy. I am all in favour of simplicity, but we must not lose sight of what drives investment, and what investors need. Targeted policies are essential. If the government relies too heavily on carbon pricing the result will simply be higher bills and higher carbon."
The report highlights a number of limitations which could arise if carbon pricing was the only policy driver to support investment in renewables:
· A carbon price will rarely be set at the level necessary to attract investment in newer clean technologies like renewables. Instead, it is more likely to drive investment from coal to gas. 
· A carbon price set high enough to drive investment in emerging technologies which cannot yet compete with established fossil fuel generation would risk a windfall for operators of existing low carbon plant and higher prices for consumers. Targeted financial support policies combined with a lower carbon price provides an effective way of providing certainty to renewable energy developers whilst driving investment away from high carbon technologies across all sectors.
· At the global level, fossil fuels are more often subsidised than taxed, which also undermines carbon pricing. The effect of fossil fuel subsidies is therefore to create, in effect a 'negative carbon price'. 
· Carbon pricing does not do enough to overcome the non-financial barriers that hinder the deployment of emerging technologies such as compatibility with existing infrastructure, incumbent lobby interests and skill shortages. 
David Nussbaum, Chief Executive of WWF-UK said "Dr Gross' report exposes the deep flaws in the argument that carbon pricing can do it all. Whilst the simplicity of this argument may sound appealing, in practice relying on carbon pricing alone is likely to lead to carbon-intensive gas plants continuing to dominate our energy mix - preventing newer and cleaner technologies from realising their potential and locking us in to a risky reliance on largely imported fossil fuels.https://www.wwf.org.uk/updates/targeted ... newables-0
The only path to cheap and reliable clean energy is innovation: better batteries, better solar cells, better biofuels, better nuclear reactors, etc. Unfortunately, few economists focus on innovation and to the extent they do they see it as “manna from heaven,” something that just happens. To the extent a carbon tax induces innovation it is through the magic of the market: higher prices provide an incentive for entrepreneurs to develop a better energy mousetrap.Economists have built a cottage industry out of comparing carbon taxes, cap-and-trade, and conventional pollution regulations. But an innovation strategy to develop cheaper, better clean energy technologies doesn’t make the cut. Frankly, this shouldn’t be a surprise as innovation is not part of neoclassical economists’ lexicon.
to believe that modest price signals in the United States alone will transform the world’s energy system is an illusion. https://thebreakthrough.org/issues/ener ... on-pricing