Second-best Climate Policy
AbstractCountries with an active climate policy often use several other policy instruments in addition to a price on carbon emissions, such as subsidies to renewable energy. An obvious reason for subsidizing alternatives to carbon energy is that the price of carbon emissions is "too low". The paper derives implications for a second-best climate policy if for some reason the price of carbon emissions is lower than the Pigovian level, and also discusses reasons policy makers might have for setting the tax rate at an ine¢ ciently low level. Even if the current tax rate is optimally set, governments cannot commit to future tax rates. In some cases this inabilty to commit may justify subsidies to investments in renewable energy.
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Bibliographic InfoPaper provided by Oslo University, Department of Economics in its series Memorandum with number 04/2012.
Length: 29 pages
Date of creation: 26 Jan 2012
Date of revision:
Contact details of provider:
Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway
Phone: 22 85 51 27
Fax: 22 85 50 35
Web page: http://www.oekonomi.uio.no/indexe.html
More information through EDIRC
carbon tax; subsidies; commitment;
Find related papers by JEL classification:
- Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
- Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
- 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-03-21 (All new papers)
- NEP-ENE-2012-03-21 (Energy Economics)
- NEP-ENV-2012-03-21 (Environmental Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Alistair Ulph & David Ulph, 2011. "Optimal Climate Change Policies When Governments Cannot Commit," Discussion Paper Series, Department of Economics 201104, Department of Economics, University of St. Andrews.
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- Fischer, Carolyn & Newell, Richard, 2004.
"Environmental and Technology Policies for Climate Mitigation,"
dp-04-05, Resources For the Future.
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- Lecuyer, Oskar & Quirion, Philippe, 2013.
"Can uncertainty justify overlapping policy instruments to mitigate emissions?,"
Elsevier, vol. 93(C), pages 177-191.
- Oskar Lecuyer & Philippe Quirion, 2012. "Can Uncertainty Justify Overlapping Policy Instruments to Mitigate Emissions?," Post-Print hal-00801927, HAL.
- Oskar Lecuyer & Philippe Quirion, 2013. "Can Uncertainty Justify Overlapping Policy Instruments to Mitigate Emissions?," Working Papers 1301, Chaire Economie du Climat.
- Oskar Lecuyer & Philippe Quirion, 2012. "Can Uncertainty Justify Overlapping Policy Instruments to Mitigate Emissions?," Working Papers 2012.91, Fondazione Eni Enrico Mattei.
- repec:hal:ciredw:hal-00866440 is not listed on IDEAS
- repec:hal:wpaper:hal-00866440 is not listed on IDEAS
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