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Incomplete International Climate Agreements: Optimal Carbon Taxes, Market Failures and Welfare Effects

Rolf Golombek and Jan Braten

Year: 1994
Volume: Volume15
Number: Number 4
DOI: 10.5547/ISSN0195-6574-EJ-Vol15-No4-7
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Abstract:
This paper provides an empirical study of optimal carbon taxes and welfare effects under incomplete international climate agreements when there are market failures in the cooperating countries. The objective of the group of countries taking part in the international climate agreement is to design carbon taxes that maximize their aggregate net income, subject to a constraint on global CO2 emissions. We use a numerical energy model to study scenarios that differ with respect to types of CO2 taxes and countries taking part in the climate agreement. We also discuss the impact on regional net income following from different international climate agreements.



Greenhouse Gas Emission Reduction: A Case Study of Sri Lanka

Peter Meier and Mohan Munasinghe

Year: 1995
Volume: Volume16
Number: Number 4
DOI: 10.5547/ISSN0195-6574-EJ-Vol16-No4-4
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Abstract:
In this paper we describe a case study for Sri Lanka that explores a wide range of options for reducing greenhouse gas (GHG) emissions. Options range from renewable technologies to carbon taxes and transportation sector initiatives. We find that setting electricity prices to reflect long-run marginal cost has a significant beneficial impact on the environment, and the expected benefits predicted on theoretical grounds are confirmed by the empirical results. Pricing reform also has a much broader impact than physical approaches to demand side management, although several options such as compact fluorescent lighting appear to have great potential. Options to reduce GHG emissions are limited as Sri Lanka lacks natural gas, and nuclear power is not practical until the system reaches a much larger size. Building the few remaining large hydro facilities would significantly reduce GHG emissions, but these would require costly resettlement programs. Given the inevitability for fossil-fuel baseload generation, both clean coal technologies such as pressurized fluidized bed combustion, as well as steam-cycle residual oil fueled plants merit consideration as alternatives to the conventional pulverized coal-fired plants currently being considered Transportation sector measures necessary to ameliorate local urban air pollution problems, such as vehicle inspection and maintenance programs, also bring about significant reductions of GHG emissions.



Market Power, International CO2 Taxation and Oil Wealth

Elin Berg, Snorre Kverndokk and Knut Einar Rosendahl

Year: 1997
Volume: Volume18
Number: Number 4
DOI: 10.5547/ISSN0195-6574-EJ-Vol18-No4-2
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Abstract:
We present an intertemporal equilibrium model for fossil fuels, and study the effects on oil prices, extraction paths and oil wealth of an international carbon tax on fossil fuel consumption Our conclusion is that a carbon tax will hurt OPEC more than other producers, as the cartel is induced by its market power to restrain production in order to maintain the oil price. Thus, the effects on the oil wealth of the competitive fringe are minor, while OPECs wealth is considerably reduced. We also show by applying a competitive model that this result is due to market structure, and not to differences in the resource base.



Climate Policy and the Steel Industry: Achieving Global Emission Reductions by an Incomplete Climate Agreement

Lars Mathiesen and Ottar Maestad

Year: 2004
Volume: Volume 25
Number: Number 4
DOI: 10.5547/ISSN0195-6574-EJ-Vol25-No4-5
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Abstract:
The steel industry is one of the largest sources of global CO2 emissions and hence a candidate for climate policies. A carbon tax on emissions in industrialized countries, however, will cause relocation of steel production to non-industrialized countries, and because of their relatively high emission intensities the effect on total emissions is ambiguous. Using a partial equilibrium model of the steel industry, this paper finds that global emissions from this industry are likely to decline substantially. This is primarily due to factor substitution within the integrated steel mills in the industrialized countries, and to some extent a shift between steel making technologies. Such effects are not well accounted for in economy wide models, which typically lump individual industries into aggregates. Furthermore, it is shown that border taxes on steel products are potentially useful instruments for achieving a given reduction in global emissions with less restructuring of domestic steel industry in the industrialized countries.



Decarbonizing the Global Economy with Induced Technological Change: Scenarios to 2100 using E3MG

Terry Barker, Haoran Pan, Jonathan Kohler, Rachel Warren, and Sarah Winne

Year: 2006
Volume: Endogenous Technological Change
Number: Special Issue #1
DOI: 10.5547/ISSN0195-6574-EJ-VolSI2006-NoSI1-12
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Abstract:
This paper reports how endogenous economic growth and technological change have been introduced into a global econometric model. It explains how further technological change might be induced by mitigation policies so as to reduce greenhouse gas emissions and stabilize atmospheric concentrations. These are the first results of a structural econometric approach to modeling the global economy using the model E3MG (energy-environment-economy model of the globe), which in turn constitutes one component in the Community Integrated Assessment System (CIAS) of the UK Tyndall Centre. The model is simplified to provide a post-Keynesian view of the long-run, with an indicator of technological progress affecting each region�s exports and energy use. When technological progress is endogenous in this way, long-run growth in global GDP is partly explained by the model. Average permit prices and tax rates about $430/tC (1995) prices after 2050 are sufficient to stabilize atmospheric concentrations at 450ppm CO2 after 2100. They also lead to higher economic growth.





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