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The Private Benefit of Carbon and its Social Cost

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  • Richard S.J. Tol

    (Department of Economics, University of Sussex
    Department of Spatial Economics, Vrije Universiteit Amsterdam
    Institute for Environmental Studies, Vrije Universiteit Amsterdam
    Tinbergen Institute, Amsterdam)

Abstract

The private benefit of carbon is the value, at the margin, of the energy services provided by the use of fossil fuels. It is the weighted average of the price of energy times the carbon dioxide emission coefficient, with energy used as weights. The private benefits is here estimated, for the first time, at $411/tCO2. The private benefit is lowest for coal use in industry and highest for residential electricity; it is lowest in Kazakhstan and highest in Norway. The private benefit of carbon is much higher than the social cost of carbon.

Suggested Citation

  • Richard S.J. Tol, 2017. "The Private Benefit of Carbon and its Social Cost," Working Paper Series 0717, Department of Economics, University of Sussex Business School.
  • Handle: RePEc:sus:susewp:0717
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    More about this item

    Keywords

    private benefit of carbon; social cost of carbon; climate policy;
    All these keywords.

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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