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How to Deal with the Risks of Phasing out Coal in Germany through National Carbon Pricing

Author

Listed:
  • Sebastian Osorio
  • Robert C. Pietzcker
  • Michael Pahle
  • Ottmar Edenhofer

Abstract

Germany aims to phase out coal to achieve its 2030 climate target, for which a UK-style carbon price floor is considered. But this measure comes with risks related to the uncertainty about what price level is sufficient, and the waterbed effect arising from unilateral policy under the EU-ETS. Quantifying these risks we find that to be on the “safe side” target-wise, the price must be nearly twice as high as the reference scenario price (33 €/tCO2). Further, cancelling 1.1 GtCO2 of certificates and forming coalitions with other countries is essential to reduce the risk that EU climate policy will renationalize.

Suggested Citation

  • Sebastian Osorio & Robert C. Pietzcker & Michael Pahle & Ottmar Edenhofer, 2018. "How to Deal with the Risks of Phasing out Coal in Germany through National Carbon Pricing," CESifo Working Paper Series 7438, CESifo.
    • Handle: RePEc:ces:ceswps:_7438
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    References listed on IDEAS

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    Cited by:

    1. Martin Kittel & Leonard Goeke & Claudia Kemfert & Pao-Yu Oei & Christian von Hirschhausen, 2020. "Scenarios for Coal-Exit in Germany—A Model-Based Analysis and Implications in the European Context," Energies, MDPI, vol. 13(8), pages 1-19, April.

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    More about this item

    Keywords

    EU-ETS; carbon price floor; coal phase-out; policy interaction; waterbed effect;
    All these keywords.

    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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