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Cumulative Emissions,Unburnable Fossil Fuel and the Optimal Carbon Tax

Author

Listed:
  • Armon Rezai

    (Vienna University of Economics and Business, Welthandelsplatz 1, 1020 Vienna, Austria)

  • Frederick van der Ploeg

    (Oxford University, Manor Road Building, Oxford OX1 3UQ, U.K.)

Abstract

A new IAM is used to calculate the optimal tradeoff between, on the one hand,locking up fossil fuel and curbing global warming, and, on the other hand, are the key driving force of changes in temperature. We highlight how time impatience, intergenerational inequality aversion and expected trend growth affect the time paths of the optimal global carbon tax and the optimal amount of fossil fuel reserves to leave untapped. We also compare these with the adverse and deleterious global warming trajectories that occur if no policy actions are taken.

Suggested Citation

  • Armon Rezai & Frederick van der Ploeg, 2016. "Cumulative Emissions,Unburnable Fossil Fuel and the Optimal Carbon Tax," Ecological Economics Papers ieep8, Institute of Ecological Economics.
    • Handle: RePEc:wiw:wiwiee:ieep8
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    References listed on IDEAS

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    3. Armon Rezai & Frederick Van der Ploeg, 2016. "Intergenerational Inequality Aversion, Growth, and the Role of Damages: Occam's Rule for the Global Carbon Tax," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 3(2), pages 493-522.
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    9. Armon Rezai & Frederick Ploeg, 2017. "Second-Best Renewable Subsidies to De-carbonize the Economy: Commitment and the Green Paradox," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 66(3), pages 409-434, March.
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    11. Rick Van der Ploeg & Armon Rezai, 2015. "Intergenerational Inequality Aversion, Growth and the Role of Damages: Occam's rule for the global tax," Economics Series Working Papers OxCarre Research Paper 15, University of Oxford, Department of Economics.
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    Cited by:

    1. William Brock & Anastasios Xepapadeas, 2019. "Regional Climate Change Policy Under Positive Feedbacks and Strategic Interactions," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 72(1), pages 51-75, January.
    2. Frederick Ploeg & Armon Rezai, 2019. "Simple Rules for Climate Policy and Integrated Assessment," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 72(1), pages 77-108, January.
    3. Chiara Ravetti & Tania Theoduloz & Giulia Valacchi, 2020. "Buy Coal or Kick-Start Green Innovation? Energy Policies in an Open Economy," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 77(1), pages 95-126, September.
    4. Asongu, Simplice A. & Le Roux, Sara & Biekpe, Nicholas, 2018. "Enhancing ICT for environmental sustainability in sub-Saharan Africa," Technological Forecasting and Social Change, Elsevier, vol. 127(C), pages 209-216.
    5. Shimbar, A., 2021. "Environment-related stranded assets: An agenda for research into value destruction within carbon-intensive sectors in response to environmental concerns," Renewable and Sustainable Energy Reviews, Elsevier, vol. 144(C).
    6. Amigues, Jean-Pierre & Moreaux, Michel, 2018. "Competing Land Uses and Fossil Fuel, Optimal Energy Conversion Rates During the Transition Toward a Green Economy Under a Pollution Stock Constraint," TSE Working Papers 18-981, Toulouse School of Economics (TSE).
    7. Taylor, David D.J. & Layurova, Mariya & Vogel, David S. & Slocum, Alexander H., 2019. "Black into green: A BIG opportunity for North Dakota’s oil and gas producers," Applied Energy, Elsevier, vol. 242(C), pages 1189-1197.
    8. Neto, Abel F.G. & Marques, Francisco C. & Amador, Adriana T. & Ferreira, Amanda D.S. & Neto, Antonio M.J.C., 2019. "DFT and canonical ensemble investigations on the thermodynamic properties of Syngas and natural gas/Syngas mixtures," Renewable Energy, Elsevier, vol. 130(C), pages 495-509.
    9. Brock, W. & Xepapadeas, A., 2017. "Climate change policy under polar amplification," European Economic Review, Elsevier, vol. 99(C), pages 93-112.
    10. Richard S.J. Tol, 2021. "Estimates of the social cost of carbon have not changed over time," Working Paper Series 0821, Department of Economics, University of Sussex Business School.
    11. Richard S. J. Tol, 2021. "Estimates of the social cost of carbon have increased over time," Papers 2105.03656, arXiv.org, revised Aug 2022.
    12. Cai, Yongyang & Brock, William & Xepapadeas, Anastasios, 2016. "Climate Change Economics and Heat Transport across the Globe: Spatial-DSICE," 2017 Allied Social Sciences Association (ASSA) Annual Meeting, January 6-8, 2017, Chicago, Illinois 251833, Agricultural and Applied Economics Association.

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    More about this item

    Keywords

    unburnable fossil fuel; cumulative emissions; optimal carbon tax; Oxford carbon cycle; trend growth; intergenerational inequality aversion; time impatience;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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