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Seven Reasons to Use Carbon Pricing in Climate Policy

Listed author(s):
  • Andrea Baranzini

    ()

    (Haute Ecole de Gestion Genève, University of Apllied Sciences Western Switzerland)

  • Jeroen van den Bergh

    ()

    (Institute of Environmental Science annd Technology (UAB); ICREA; Institute of Environmental Studies & Faculty of Economics and Business Administration (LSE))

  • Stefano Carattini

    ()

    (Haute Ecole de Gestion Genève, University of Apllied Sciences Western Switzerland; Grantham Research Institute on Climate Change and the Environment (LSE))

  • Richard Howarth

    ()

    (Environmental Studies Program, Dartmouth College)

  • Emilio Padilla

    ()

    (Department of Applied Economics (UAB))

  • Jordi Roca

    ()

    (Faculty of Economics and Business (UB))

The idea of a global carbon price has been a recurrent theme in debates on international climate policy. Discarded at the Conference of Parties (COP) of Copenhagen in 2009, it remained part of deliberations for a climate agreement in subsequent years. Unfortunately, there is still much misunderstanding about the reasons for implementing a global carbon price. As a result, ideological and political resistance against it prospers. Here we present the main arguments in favor of a carbon price to stimulate a fair and well-informed discussion about climate policy instruments. This includes arguments that have received surprisingly little attention so far. It is stressed that a main reason to use carbon pricing is environmental effectiveness, so not only economic efficiency (including the special case of cost-effectiveness). In addition, we provide ideas on how to implement a uniform global carbon price, whether using a carbon tax or emissions trading.

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File URL: http://www.ecap.uab.cat/RePEc/doc/wpdea1507.pdf
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Paper provided by Department of Applied Economics at Universitat Autonoma of Barcelona in its series Working Papers with number wpdea1507.

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Length: 11 pages
Date of creation: Nov 2015
Handle: RePEc:uab:wprdea:wpdea1507
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Web page: http://www.uab.cat/departament/economia-aplicada/
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  1. Martin L. Weitzman, 1974. "Prices vs. Quantities," Review of Economic Studies, Oxford University Press, vol. 41(4), pages 477-491.
  2. Stefan Ambec & Mark A. Cohen & Stewart Elgie & Paul Lanoie, 2013. "The Porter Hypothesis at 20: Can Environmental Regulation Enhance Innovation and Competitiveness?," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 7(1), pages 2-22, January.
  3. Jaffe Adam B. & Stavins Robert N., 1995. "Dynamic Incentives of Environmental Regulations: The Effects of Alternative Policy Instruments on Technology Diffusion," Journal of Environmental Economics and Management, Elsevier, vol. 29(3), pages 43-63, November.
  4. Philippe Aghion & Antoine Dechezleprêtre & David Hémous & Ralf Martin & John Van Reenen, 2016. "Carbon Taxes, Path Dependency, and Directed Technical Change: Evidence from the Auto Industry," Journal of Political Economy, University of Chicago Press, vol. 124(1), pages 1-51.
  5. Pizer, William A., 2002. "Combining price and quantity controls to mitigate global climate change," Journal of Public Economics, Elsevier, vol. 85(3), pages 409-434, September.
  6. Don Fullerton, 2010. "Six Distributional Effects of Environmental Policy," CESifo Working Paper Series 3299, CESifo Group Munich.
  7. Hoel, Michael, 1992. "Carbon taxes : An international tax or harmonized domestic taxes?," European Economic Review, Elsevier, vol. 36(2-3), pages 400-406, April.
  8. Antal, Miklós & van den Bergh, Jeroen C.J.M., 2014. "Re-spending rebound: A macro-level assessment for OECD countries and emerging economies," Energy Policy, Elsevier, vol. 68(C), pages 585-590.
  9. William Nordhaus, 2015. "Climate Clubs: Overcoming Free-Riding in International Climate Policy," American Economic Review, American Economic Association, vol. 105(4), pages 1339-1370, April.
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