Flattening the carbon extraction path in unilateral cost-effective action

Arbeitspapier

Internalizing the global negative externality of carbon emissions requires flattening the extraction path of world fossil energy resources (= world carbon emissions). We consider governments having sign-unconstrained emission taxes at their disposal and seeking to prevent world emissions from exceeding some binding aggregate emission ceiling in the medium term. Such a ceiling policy can be carried out either in full cooperation of all (major) carbon emitting countries or by a sub-global climate coalition. Unilateral action has to cope with carbon leakage and high costs which makes a strong case for choosing a policy that implements the ceiling in a cost-effective way. In a two-country two-period general equilibrium model with a non-renewable fossil-energy resource we characterize the unilateral cost-effective ceiling policy and compare it with its fully cooperative counterpart. We show that with full cooperation there exists a cost-effective ceiling policy in which only first-period emissions are taxed at a rate that is uniform across countries. In contrast, the cost-effective ceiling policy of a sub-global climate coalition is characterized by emission regulation in both periods. That policy may consist either of positive tax rates in both periods or of negative tax rates (= subsidies) in both periods or of a positive rate in the first and a negative rate in the second period. The share of the total stock of energy resources owned by the sub-global climate coalition turns out to be a decisive determinant of the sign and magnitude of unilateral cost-effective taxes.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: CESifo Working Paper ; No. 3546

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Taxation and Subsidies: Incidence ; Exhaustible Resources and Economic Development ; Climate; Natural Disasters and Their Management; Global Warming
• Thema: unilateral climate policy ; intertemporal climate policy ; non-renewable energy resources ; emission taxes ; Klimaschutz ; Internationale Umweltpolitik ; Kohlendioxid ; Intertemporale Allokation ; Ökosteuer ; Optimale Besteuerung ; Theorie

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Eichner, Thomas ; Pethig, Rüdiger
• Ereignis: Veröffentlichung
• (wer): Center for Economic Studies and ifo Institute (CESifo)
• (wo): Munich
• (wann): 2011

Weitere Informationen

• Handle: http://hdl.handle.net/10419/49487
• Letzte Aktualisierung: 10.03.2025, 11:44 MEZ