IDEAS home Printed from
   My bibliography  Save this paper

Reaching a climate agreement - do we have to compensate for energy market effects of climate policy?


  • Sonja Peterson
  • Matthias Weitzel


Because of large economic and environmental asymmetries among world regions and the incentive to free ride, an international climate Regime with broad participation is hard to reach. Most of the so far proposed Regimes base on an allocation of emission rights that is to be perceived as fair. Yet, there are also some arguments to focus more on the actual welfare implications of different Regimes and to aim for a "fair" Distribution of resulting costs. Using the Cpmputable General Equilibrium model DART, we analyze the driving Forces of welfare implications in different Scenarios where a global Emission target derived from the 2 degree target is reached. These include two Regimes that are often presumed to be "fair", namely a harmonized international carbon tax and a cap and trade System based on the convergence of per capita Emission rights, and additionally an "equal loss" Scenario where welfare losses relative to a Business as usual Scenario are equal for all Major world regions. We show that "eqaual losses" would mean in particular to compensate for the effects of climate policy on energy markets and e.g. to compensate for the loss of oil revenues as the Organization of Petroleum Exporting Countries (OPEC) argues for

Suggested Citation

  • Sonja Peterson & Matthias Weitzel, 2014. "Reaching a climate agreement - do we have to compensate for energy market effects of climate policy?," Kiel Working Papers 1965, Kiel Institute for the World Economy.
  • Handle: RePEc:kie:kieliw:1965

    Download full text from publisher

    File URL:
    Download Restriction: no

    More about this item


    International climate Regime; Emission Targets; Emission trading; taxes; Distribution;

    JEL classification:

    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kie:kieliw:1965. 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: (Dieter Stribny). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.