What is it going to take to achieve 2020 Emission Targets? Marginal abatement cost curves and the budgetary impact of CO2 taxation in Portugal (
The objective of this paper is to study CO2 taxation in its dual role as a climate and fiscal policy instrument. It develops marginal abatement cost curves for CO2 emissions using a dynamic general equilibrium model of the Portuguese economy which highlights the mechanisms of endogenous growth and includes a detailed modeling of the public sector. It also considers complementary cost curves corresponding to the impact of CO2 taxes on GDP and on the public budget. Simulation results show that a tax of 17.00 Euros per tCO2 has the capacity to limit emissions to 62.6 Mt CO2 in 2020, consistent with the existing climate policy target for Portugal. In turn, changes in tax revenues, together with reductions in public spending, lead to a 2.7% decline in public debt. These desirable outcomes come at the cost of a 0.7% reduction in GDP. In general, stricter emission targets imply greater equilibrium CO2 tax levels and larger GDP losses, although these are accompanied by greater reductions in public debt. Finally, the paper highlights the importance of public spending behavior for projecting the impact of CO2 taxes on public revenues and the public account and designing policies to promote fiscal consolidation.
|Date of creation:||03 Jan 2014|
|Date of revision:|
|Contact details of provider:|| Postal: P.O. Box 8795, Williamsburg, VA 23187-8795|
Phone: (757) 221-4311
Fax: (757) 221-2390
Web page: http://www.wm.edu/economics/
More information through EDIRC
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.:
- van Zon, Adriaan & Yetkiner, I. Hakan, 2003. "An endogenous growth model with embodied energy-saving technical change," Resource and Energy Economics, Elsevier, vol. 25(1), pages 81-103, February.
- Böhringer, Christoph & Rutherford, Thomas F. & Tol, Richard S. J., 2009. "The EU 20/20/2020 Targets: An Overview of the EMF22 Assessment," Papers WP325, Economic and Social Research Institute (ESRI).
- Gilbert Metcalf & David Weisbach, 2008.
"The Design of a Carbon Tax,"
Discussion Papers Series, Department of Economics, Tufts University
0727, Department of Economics, Tufts University.
- Gilbert Metcalf & David Weisbach, 2008. "The Design of a Carbon Tax," Discussion Papers Series, Department of Economics, Tufts University 0728, Department of Economics, Tufts University.
- Carlo Carraro & Enrica De Cian & Massimo Tavoni, 2009.
"Human Capital Formation and Global Warming Mitigation: Evidence from an Integrated Assessment Model,"
CESifo Working Paper Series
2874, CESifo Group Munich.
- Carlo Carraro & Enrica De Cian & Massimo Tavoni, 2009. "Human capital formation and global warming mitigation: evidence from an integrated assessment model," Working Papers 2009_30, Department of Economics, University of Venice "Ca' Foscari".
When requesting a correction, please mention this item's handle: RePEc:cwm:wpaper:105. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Daifeng He)or (Alfredo Pereira)
If references are entirely missing, you can add them using this form.