Econonomics of Energy and Environmental Policy

Article Details

IAEE Members and subscribers to Economics of Energy & Environmental Policy : Please log in to access the full text article.

Overcoming the Copenhagen Failure with Flexible Commitments

Open Access Article

The fundamental issues presented by climate change are first, that the global environment is a global public good and second, the question of how to share the burden of providing a better climate. Everyone would like to "free ride" on the efforts of others, but there is disagreement over who is free riding. The Kyoto approach, based on dividing up emission rights, has an inherent problem in that such rights could easily reach a monetary value of over a trillion dollars a year. The approach suggested here avoids any attempt at a grand solution to the fair allocation of these rights. A low-carbon economy could be achieved through the imposition of a moderate carbon price, which would raise substantial revenue and allow a reduction in other taxes, thereby keeping the deadweight loss small. Countries should be given flexibility in how they meet their obligations - whether through a carbon tax, a system of cap and trade, or even possibly certain regulatory mechanisms. But a fully voluntary agreement likely cannot include countries that export a significant amount of fossil fuel. A green fund financed by allocating say 20% of carbon revenues collected in developed countries could be used to implement "differentiated responsibilities."
Download PDF
Download Ebook
Executive Summary: View

JEL Codes:Q54: Climate; Natural Disasters and Their Management; Global Warming, H23: Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies, D47: Market Design

Keywords: Climate change, Global warming, Carbon pricing, UN climate negotiations

DOI: 10.5547/2160-5890.4.2.jsti

Reference information is available for this article. Join IAEE or purchase the article to view reference data.

Published in Volume 4, Number 2 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.


© 2024 International Association for Energy Economics | Privacy Policy | Return Policy