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A Tax-Based Approach to Slowing Global Climate Change

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  • Aldy, Joseph E.
  • Ley, Eduardo
  • Parry, Ian W.H.

    ()
    (Resources for the Future)

Abstract

In this paper, we discuss the design of carbon dioxide (CO2) taxes at the domestic and international level and the choice of taxes versus a cap-and-trade system. A strong case can be made for taxes on uncertainty, fiscal, and distributional grounds, though this critically hinges on policy specifics and how revenues are used. The efficient near-term tax is at least $5–$20 per ton of CO2 and the tax should be imposed upstream with incentives for downstream sequestration and abatement of other greenhouse gases. At the international level, a key challenge is the possibility that emissions taxes might be undermined through offsetting changes in other energy policies.

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Bibliographic Info

Paper provided by Resources For the Future in its series Discussion Papers with number dp-08-26.

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Date of creation: 15 Jul 2008
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Handle: RePEc:rff:dpaper:dp-08-26

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Keywords: Global climate change; CO2 tax; cap-and-trade; policy design;

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References

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  1. Lawrence H. Goulder & Ian W. H. Parry, 2008. "Instrument Choice in Environmental Policy," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 2(2), pages 152-174, Summer.
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  16. Fischer, Carolyn & Newell, Richard, 2004. "Environmental and Technology Policies for Climate Mitigation," Discussion Papers dp-04-05, Resources For the Future.
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Citations

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Cited by:
  1. Augusto de la Torre & Pablo Fajnzylber & John Nash, 2009. "Low Carbon, High Growth : Latin American Responses to Climate Change - An Overview," World Bank Publications, The World Bank, number 3022, October.
  2. Devarajan, Shantayanan & Go, Delfin S. & Robinson, Sherman & Thierfelder, Karen, 2009. "Tax policy to reduce carbon emissions in south Africa," Policy Research Working Paper Series 4933, The World Bank.
  3. Wojciech Kopczuk & Justin Marion & Erich Muehlegger & Joel Slemrod, 2013. "Do the Laws of Tax Incidence Hold? Point of Collection and the Pass-through of State Diesel Taxes," NBER Working Papers 19410, National Bureau of Economic Research, Inc.
  4. Santos, Georgina & Behrendt, Hannah & Maconi, Laura & Shirvani, Tara & Teytelboym, Alexander, 2010. "Part I: Externalities and economic policies in road transport," Research in Transportation Economics, Elsevier, vol. 28(1), pages 2-45.
  5. Moritz Rohling & Markus Ohndorf, 2010. "Prices vs. Quantities with Fiscal Cushioning," IED Working paper 10-11, IED Institute for Environmental Decisions, ETH Zurich.
  6. Pope, Jeff & Owen, Anthony D., 2009. "Emission trading schemes: potential revenue effects, compliance costs and overall tax policy issues," Energy Policy, Elsevier, vol. 37(11), pages 4595-4603, November.
  7. repec:wbk:wboper:3022 is not listed on IDEAS
  8. Eduardo, Ley & Jessica, Boccardo, 2009. "The Taxation of Motor Fuel: International Comparison," MPRA Paper 19461, University Library of Munich, Germany.
  9. Fischer, Carolyn & Springborn, Michael R., 2009. "Emissions Targets and the Real Business Cycle: Intensity Targets versus Caps or Taxes," Discussion Papers dp-09-47, Resources For the Future.

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