The Carbon-Budget Approach to Climate Stabilization: Cost-Effective Subglobal versus Global Action
AbstractScientific expertise suggests that mitigating extreme world-wide climate change damages requires avoiding increases in the world mean temperature exceeding 2◦ Celsius. To achieve the two degree target, the cumulated global emissions must not exceed some limit, the so-called global carbon budget. In a two-period two-country general equilibrium model with a finite stock of fossil fuels we compare the cooperative cost-effective policy with the unilateral cost-effective policy of restricting emissions to the global carbon budget. In its simplest form, the cost-effective global policy is shown to consist of a joint emission trading scheme in the first period (only). In sharp contrast, subglobal cost-effective regulation may require the abating country to tax its first-period consumption and to tax or subsidize its emissions in the first and/or second period.
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Bibliographic InfoPaper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3232.
Date of creation: 2010
Date of revision:
carbon emissions; carbon budget; cooperative; unilateral; cost-effective regulation;
Other versions of this item:
- Thomas Eichner & Rüdiger Pethig, 2010. "The carbon-budget approach to climate stabilization: Cost-effective subglobal versus global action," Volkswirtschaftliche DiskussionsbeitrÃ¤ge, UniversitÃ¤t Siegen, FakultÃ¤t Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht 143-10, Universität Siegen, Fakultät Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht.
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
- Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters
- Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
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