One of the major challenges students may encounter is assessing the political and economic feasibility of different carbon pricing policies. Implementing or significantly modifying carbon pricing is highly controversial and politically complex. Students would need to carefully consider the political landscape and stakeholder positions regarding different carbon tax or cap-and-trade proposals. They would need to realistically analyze the prospects for actual policy adoption and design appropriate policy recommendations.

Another challenge is obtaining sufficient data and background information to conduct a thorough policy analysis and impact assessment. Reliable and comprehensive data on topics like current emission levels, emission reduction targets, energy use by sector, forecasts of economic and emission trends, and costs of mitigation technologies is required but not always readily available, especially at localized levels. Students may struggle to find data at the appropriate scope and level of detail needed. They would need to budget adequate time for research and data collection from multiple sources.

Evaluation of economic and social impacts is also difficult due to uncertainties and complexity. Students would have to make reasonable assumptions about critical parameters like the carbon price level, responses by industry and consumers, impact on GDP, revenue recycling approaches, effects on jobs, international competitiveness concerns for trade-exposed sectors, and distributional impacts on low-income households. Sophisticated economy-wide modeling is typically required to assess economy-wide effects, which may be beyond the technical skills and time constraints of students.

Designing an equitable and politically viable carbon pricing policy poses challenges. Students would need to consider options for recycling carbon revenues, providing transitional assistance for adversely affected communities and workers, and implementing accompanying policies to address distributional concerns and smooth the transition to a low-carbon economy. Balancing economic efficiency, environmental effectiveness, and social equity objectives requires value judgments that may be contentious.

Stakeholder engagement is an important component of capstone projects but can also be difficult. Students need to properly identify stakeholders like industry associations, environmental groups, equity advocates, indigenous communities, and conduct in-depth interviews or facilitate consultations. This process requires coordination, diplomacy, and political sensitivity that students may not have experience with. It is also challenging to incorporate diverse stakeholder perspectives and priorities into policy analysis and recommendations in an impartial manner.

Communicating technical findings clearly and cogently to both policymaking audiences and general public also poses a hurdle. Carbon pricing mechanisms involve complex economic modeling, policy design options, uncertainties, and value judgments that must be distilled into clear and compelling policy briefs or reports. Students need strong analytical, writing, and presentation skills to convey nuanced recommendations effectively yet accessibly for different target audiences.

Securing necessary review and feedback from policymaking stakeholders and climate policy experts throughout the capstone process can be difficult due to time constraints of busy professionals and lack of personal connections for students. External perspectives are crucial to validate assumptions, refining analysis and policy perspectives based on real-world factors of political economy and feasibility that students may not have considered. It is not easy for students to obtain meaningful input and review in a timely manner.

Carbon pricing capstone projects require grappling with uncertainties in data and models, politically complex stakeholder perspectives, multifaceted policy design challenges, and difficulties in technical communication. While such “real world” complexities mimic challenges that climate policymakers face, they render the capstone experience more demanding and constraints on resources and timetables more keenly felt. Proper project scoping, diligent research, and securing guidance from supervisors and experts are needed to help students navigate these obstacles and produce a high quality final policy analysis and recommendations. With adequate preparation and persistence, students can gain invaluable insights into climate policy processes through conducting ambitious carbon pricing capstone studies.