A simplified view of the future of energy is this: when the total cost of solar energy goes below the cost of dirty energy like coal, it will be a huge deal and will lead to widespread adoption of solar. While this threshold varies greatly by geography, think of dirty energy costs as a line to cross that when a solar company gets below it they can take a huge chunk of market share and supplant existing dirty energy. This means economic benefits of getting below this threshold are big, and this gives the market strong incentives to innovate to push costs down right now.

However, once we go below that threshold and solar is cheaper than dirty energy, the incentives to push costs further down will be reduced.

This matters for policy, because what a carbon tax does is push the required cost threshold up. This would allow solar to become the more profitable source of energy in the US sooner and increase the speed of its dominance here.