22 results on '"EDENHOFER, OTTMAR"'
Search Results
2. Green fiscal reform for a just energy transition in Latin America
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Jakob Michael, Soria Rafael, Trinidad Carlos, Edenhofer Ottmar, Bak Celine, Bouille Daniel, Buira Daniel, Carlino Hernan, Gutman Veronica, Hübner Christian, Knopf Brigitte, Lucena André, Santos Luan, Scott Andrew, Steckel Jan Christoph, Tanaka Kanako, Vogt-Schilb Adrien, and Yamada Koichi
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green fiscal reform ,energy subsidies ,latin america ,multi-objective climate policy ,sequencing ,distribution ,h23 ,e62 ,q54 ,n16 ,q48 ,Social Sciences ,Economics as a science ,HB71-74 - Abstract
Green fiscal reforms would contribute to climate change mitigation, increase the economic efficiency of national tax systems and provide additional public revenues. Some countries in Latin America have already taken first steps towards green fiscal reforms. This outlook article provides an overview of the major challenges for the successful implementation of such reforms and discusses how they could be overcome.
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- 2019
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3. Is capital back? The role of land ownership and savings behavior
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Franks, Max, Klenert, David, Schultes, Anselm, Lessmann, Kai, and Edenhofer, Ottmar
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- 2018
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4. On the Governance of Carbon Dioxide Removal – A Public Economics Perspective
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Edenhofer, Ottmar, Franks, Max, Kalkuhl, Matthias, and Runge-Metzger, Artur
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D61 ,Q54 ,social cost of carbon ,H23 ,impermanence ,ddc:330 ,EU-ETS ,climate policy ,carbon dioxide removal ,Q58 - Abstract
This paper highlights the importance of carbon dioxide removal (CDR) technologies for climate policy. We first describe their role in iconic transformation pathways and discuss removal costs and storage duration of different technologies. Based on economic principles, we characterize optimal removal flows and reservoirs for non-permanent removals. Furthermore, we discuss different pricing regimes that achieve an optimal allocation under different information and liability conditions. Notably, seemingly cheap removal technologies in the land sector can indeed be very expensive when increasing opportunity costs and and impermanence are appropriately accounted for. The use of non-permanent removal – though to a certain extent economically optimal – creates high liability to firms and regulators that warrants a careful and deliberative risk management. Based on these insights, we discuss how policy makers can embed the CDR option in the EU's policy architecture. There are four key tasks for regulating bodies to ensure an optimal governance: the management of the net carbon emission cap; support for research, development and diffusion of CDR technologies; certification of the quality of removals; management of the liability implied by non-permanent CDR. We propose that three new institutions, a European Carbon Central Bank, a Carbon Removal Certification Authority and a Green Leap Innovation Authority, are established to carry out these tasks.
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- 2023
5. Ramsey meets Thünen: the impact of land taxes on economic development and land conservation
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Kalkuhl, Matthias and Edenhofer, Ottmar
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- 2017
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6. Pigou's Advice and Sisyphus' Warning: Carbon Pricing with Non-Permanent Carbon-Dioxide Removal
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Kalkuhl, Matthias, Franks, Max, Gruner, Friedemann, Lessmann, Kai, and Edenhofer, Ottmar
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D61 ,Q54 ,social cost of carbon ,H23 ,impermanence ,carbon capture ,ddc:330 ,climate policy ,carbon dioxide removal ,Q58 - Abstract
Carbon dioxide removal from the atmosphere is becoming an important option to achieve net zero climate targets. This paper develops a welfare and public economics perspective on optimal policies for carbon removal and storage in non-permanent sinks like forests, soil, oceans, wood products or chemical products. We derive a new metric for the valuation of non-permanent carbon storage, the social cost of carbon removal (SCC-R), which embeds also the conventional social cost of carbon emissions. We show that the contribution of CDR is to create new carbon sinks that should be used to reduce transition costs, even if the stored carbon is released to the atmosphere eventually. Importantly, CDR does not raise the ambition of optimal temperature levels unless initial atmospheric carbon stocks are excessively high. For high initial atmospheric carbon stocks, CDR allows to reduce the optimal temperature below initial levels. Finally, we characterize three different policy regimes that ensure an optimal deployment of carbon removal: downstream carbon pricing, upstream carbon pricing, and carbon storage pricing. The policy regimes differ in their informational and institutional requirements regarding monitoring, liability and financing.
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- 2022
7. Optimal Carbon Taxation and Horizontal Equity: A Welfare-Theoretic Approach with Application to German Household Data
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Hänsel, Martin C., Franks, Max, Kalkuhl, Matthias, and Edenhofer, Ottmar
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Q52 ,carbon price ,Q54 ,just transition ,H23 ,330 Wirtschaft ,horizontal equity ,ddc:330 ,H21 ,climate policy ,renewable energy subsidies ,redistribution - Abstract
We develop a model of optimal carbon taxation and redistribution taking into account horizontal equity concerns by considering heterogeneous energy efficiencies. By deriving first- and second-best rules for policy instruments including carbon taxes, transfers and energy subsidies, we then investigate analytically how horizontal equity is considered in the social welfare maximizing tax structure. We calibrate the model to German household data and a 30 percent emission reduction goal. Our results show that energy-intensive households should receive more redistributive resources than energy-efficient households if and only if social inequality aversion is sufficiently high. We further find that redistribution of carbon tax revenue via household-specific transfers is the first-best policy. Equal per-capita transfers do not suffer from informational problems, but increase mitigation costs by around 15 percent compared to the first- best for unity inequality aversion. Adding renewable energy subsidies or non-linear energy subsidies, reduces mitigation costs further without relying on observability of households’ energy efficiency., CEPA Discussion Papers; 28
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- 2021
8. Technology Beats Capital -- Sharing the Carbon Price Burden in Federal Europe
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Roolfs, Christina, Gaitan Soto, Beatriz, Edenhofer, Ottmar, and Lessmann, Kai
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Federalism ,Unanimity ,H23 ,Pareto-improvingpolicy ,ddc:330 ,H87 ,Emission Regulation ,European Union ,H77 ,Transfers ,Q58 ,H62 - Abstract
Passing federal environmental policy reform is a challenge as the approval of interest groups such as consumers and state-level governments is often a prerequisite. Among others, the burden sharing's progressivity has a large impact on reform approval. We investigate how carbon tax payments by states to a federal authority are influenced by differences in technological emission intensity and wealth and show how they can turn out to be at the expense of poor states. We show that a uniform federal carbon tax that is endorsed by all states with equal per capita transfers can theoretically put a higher burden on poorer states than richer states. The opposite applies for transfers based on historical emissions (sovereignty transfers) which reduce the burden of emissionintensive states. We test our results numerically in a general equilibrium model with a vertical federalism governance structure calibrated to the European Union. Our simulations show that a federal minimum emissions tax with sovereignty transfers is twice as high as for equal per capita transfers and also has a progressive effect.
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- 2021
9. Optimal Redistributive Wealth Taxation When Wealth Is More Than Just Capital
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Franks, Max and Edenhofer, Ottmar
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H23 ,ddc:330 ,H21 ,land rent tax ,D63 ,E62 ,optimal taxation ,wealth inequality ,Georgism ,D31 ,Q24 ,social welfare - Abstract
We show how normative standpoints determine optimal taxation of wealth. Since wealth is not equal to capital, we find very different welfare implications of land rent-, bequest- and capital taxation. It is mainly land rents that should be taxed. We develop an overlapping generations model with heterogeneous agents and calibrate it to OECD data. We compare three normative views. First, the Kaldor-Hicks criterion favors the laissez-faire equilibrium. Second, with prioritarian welfare functions based on money-metric utility, high land rent taxes are optimal due to a portfolio effect. Third, if society disapproves of bequeathing, bequest taxation becomes slightly more desirable.
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- 2020
10. Steering the climate system: an extended comment
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Mattauch, Linus, Millar, Richard, van der Ploeg, Rick, Rezai, Armon, Schultes, Anselm, Venmans, Frank, Bauer, Nico, Dietz, Simon, Edenhofer, Ottmar, Farrell, Niall, Hepburn, Cameron, Luderer, Gunnar, Pless, Jacquelyn, Spuler, Fiona, FBA, Nicholas Stern, and Teytelboym, Alexander
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Q54 ,H23 ,ddc:330 ,Q58 - Abstract
Lemoine and Rudik (2017) argue that it is efficient to delay reducing carbon emissions, because there is substantial inertia in the climate system. However, this conclusion rests upon misunderstanding the relevant climate physics: there is no substantial lag between CO2 emissions and warming, which policy could rely upon. Applying a mainstream climate physics model to the economics of Lemoine and Rudik (2017) invalidates the article’s implications for climate policy: the cost-effective carbon price that limits warming to a range of targets including 2 oC starts high and increases at the interest rate.
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- 2019
11. The social cost of carbon and inequality: when local redistribution shapes global carbon prices
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Kornek, Ulrike, Klenert, David, Edenhofer, Ottmar, and Fleurbaey, Marc
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D61 ,inequality ,climate change ,Q54 ,social cost of carbon ,H23 ,ddc:330 ,H21 ,D30 ,D63 ,optimal taxation - Abstract
The social cost of carbon is the central economic measure for aggregate climate change damages and functions as a metric for optimal carbon prices. Previous literature shows that inequality significantly influences the level of the social cost of carbon, but mostly neglects a major source of inequality - heterogeneity in income below the national level. We characterize the relationship between climate and redistributional policy in an optimal taxation model that explicitly accounts for inequality between and within countries. In particular, we demonstrate that climate and distributional policy cannot be separated when national governments fail to compensate low-income households for climate change damages: Even if only one country does not compensate especially affected households, the social cost of carbon increases globally. Further, we use numerical methods to estimate the scope of these effects. Our results suggest that it is crucial to correct previous estimates of the social cost of carbon for national distributional policies.
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- 2019
12. Green fiscal reform for a just energy transition in Latin America
- Author
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Jakob, Michael, Soria, Rafael, Trinidad, Carlos, Edenhofer, Ottmar, Bak, Céline, Bouille, Daniel, Buira, Daniel, Carlino, Hernan, Gutman, Veronica, Hübner, Christian, Knopf, Brigitte, Lucena, André, Santos, Luan, Scott, Andrew, Steckel, Jan Christoph, Tanaka, Kanako, Vogt-Schilb, Adrien, and Yamada, Koichi
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Latin America ,Q54 ,H23 ,green fiscal reform ,ddc:330 ,distribution ,Q48 ,energy subsidies ,multi-objective climate policy ,sequencing ,E62 ,N16 - Abstract
Green fiscal reforms would contribute to climate change mitigation, increase the economic efficiency of national tax systems and provide additional public revenues. Some countries in Latin America have already taken first steps towards green fiscal reforms. This paper provides an overview of the major challenges for the successful implementation of such reforms and discusses how they could be overcome. The authors first discuss the role of country-specific economic and political enabling conditions that need to be in place for successful implementation for green successful reforms. Second, they emphasize the importance of comprehensive reform plans that include all relevant ministries and agencies and are well-aligned with other policy objectives, such as energy security and industrial development. Third, they highlight how appropriate sequencing and gradualism could lower implementation costs and hence increase the political feasibility of green fiscal reforms. Finally, the authors analyze the potential impacts of green fiscal reforms on the distribution of income and discuss transfer schemes that could avoid adverse outcomes for the poorest parts of the population. They use these four dimensions to illustrate why recent reform efforts in selected Latin American countries have been successful or have failed, respectively.
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- 2018
13. Feldstein Meets George: Land Rent Taxation and Socially Optimal Allocation in Economies with Environmental Externality
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Dao, Nguyen Thang and Edenhofer, Ottmar
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H23 ,ddc:330 ,Q50 ,overlapping generations economy ,I31 ,land rent ,taxation ,socially optimal allocation - Abstract
We consider an overlapping generations (OLG) economy with land as a fixed factor of production and an environmental externality on production in which tax revenue from land rent and/or from other schemes such as labor income, capital income, and production taxation can be used for environmental protection through investment in emission mitigation. We show that, for any given target of stationary stock of pollution, the land rent taxation scheme leads to a higher steady state capital accumulation than the other schemes, and hence the steady state consumption of agents when young under this scheme is also higher than under the others. In addition, under an ambitious mitigation target when the efficiency of the mitigation technology is relatively high compared to the dirtiness of production, the land rent taxation also provides a higher steady state consumption when old, resulting in higher social welfare, than the others. In the second part of the paper, we propose a period-by-period balanced budget policy, which includes land rent and capital income taxes with intergenerational transfers, to decentralize the socially optimal allocation during the transitional phase to the social planner's steady state.
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- 2018
14. Climate Policy Enhances Efficiency: A Macroeconomic Portfolio Effect
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Siegmeier, Jan, Mattauch, Linus, and Edenhofer, Ottmar
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Q30 ,Q54 ,H23 ,ddc:330 ,E22 ,overlapping generations ,H21 ,resource rent taxation ,capital underaccumulation ,carbon pricing - Abstract
Carbon pricing regulates emission flows and collects rents from underlying fossil resource stocks. The resulting investment shift implies lower climate policy costs and improved welfare if capital is underaccumulated. We prove that under emission trading, such a beneficial macroeconomic portfolio effect between fossil stocks and capital is induced if some permits are auctioned. Alternatively, a carbon tax also induces a portfolio effect, but cannot simultaneously implement a given mitigation path and collect an arbitrary rent share. Finally, treating the right to recurrently receive a share of total emission permits as a tradable asset is formally, but not politically equivalent.
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- 2015
15. A Public Finance Perspective on Climate Policy: Six Interactions That May Enhance Welfare
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Siegmeier, Jan, Mattauch, Linus, Franks, Max, Klenert, David, Schultes, Anselm, and Edenhofer, Ottmar
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Taxation ,Policy Interactions ,B41 ,Q54 ,H23 ,Redistribution ,ddc:330 ,H21 ,H54 ,H60 ,Carbon Pricing ,Public Spending - Abstract
Climate change economics mostly neglects sizeable interactions of carbon pricing with other fiscal policy instruments. Conversely, public finance typically overlooks the effects of future decarbonization efforts when devising instruments for the major goals of fiscal policy. We argue that such a compartmentalisation is undesirable: policy design taking into account such interdependencies may enhance welfare and change the distribution of mitigation costs within and across generations. This claim is substantiated by analyzing six interactions between climate policy and public finance that are insufficiently explored in current research: (i) reduced tax competition in an open economy, (ii) portfolio effects induced through climate policy, (iii) restructuring public spending, (iv) revenue recycling for productive public investment, (v) greater intragenerational equity through appropriate revenue recycling and (vi) intergenerational Pareto-improvements through intertemporal transfers. We thereby structure the hitherto identified interactions between climate change mitigation and public finance and show that jointly considering carbon pricing and fiscal policy is legitimate and mandatory for sound policy appraisal.
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- 2015
16. Public Investment when Capital is Back - Distributional Effects of Heterogeneous Saving Behavior
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Mattauch, Linus, Edenhofer, Ottmar, Klenert, David, and Bénard, Sophie
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E60 ,inequality ,H23 ,public capital ,saving behavior ,ddc:330 ,wealth disparity ,H31 ,H54 ,household heterogeneity ,Pasinetti Paradox ,H40 - Abstract
We study the impact of heterogeneous saving behavior on the distributional effects of public investment. A capital tax is levied to finance productive public capital in an economy with two types of households: high income households who save dynastically and middle income households who save for retirement. We find that inequality is reduced the higher the capital tax rate and that low rates even constitute a Pareto-improvement. There is thus no clear-cut trade-off between efficiency and inequality: middle income households’ consumption is maximal at a higher capital tax rate than high income households’ consumption.
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- 2014
17. On the Fiscal Strategies of Escaping Poverty-Environment Traps (and) Towards Sustainable Growth
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Dao, Nguyen Thang and Edenhofer, Ottmar
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D62 ,H23 ,K32 ,ddc:330 ,E22 ,overlapping generations economy ,final good sectors ,H21 ,poverty-environment trap ,intermediate sectors ,fiscal policy - Abstract
An economy with clean and dirty intermediate inputs may fall into a trap characterized by low environmental quality and low life expectancy, while the others converge to opposite steady states. We propose new strategies towards sustainable growth. They include: (i) taxes (subsidies) imposed on the production of intermediate inputs to improve environmental quality, and therefore, life expectancy and capital accumulation, in order to guarantee that an economy locked in a poverty-environment trap can escape the stagnation; (ii) taxes (subsidies) imposed on the production of intermediate inputs, consumption, and capital income in order to decentralize the transition to the social optimum.
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- 2014
18. Hypergeorgism: When is Rent Taxation as a Remedy for Insufficient Capital Accumulation Socially Optimal?
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Edenhofer, Ottmar, Mattauch, Linus, and Siegmeier, Jan
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revenue recycling ,H23 ,ddc:330 ,social optimum ,overlapping generations ,H21 ,underaccumulation ,H22 ,land rent tax ,Q24 - Abstract
Imperfect altruism between generations may lead to insufficient capital accumulation. We study the welfare consequences of taxing the rent on a fixed production factor, such as land, in this setting. We prove that taxing the rent is welfare-enhancing as it increases capital investment. This holds for any tax level and any recycling of the tax revenues except for combinations of high taxes and strongly redistributive recycling. Specific forms of redistribution of the land rent tax - a capital subsidy or a transfer directed at fundless newborns - allow to reproduce the social optimum under parameter restrictions valid for most economies.
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- 2013
19. Low-Carbon Development through International Specialization
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Schwerhoff, Gregor and Edenhofer, Ottmar
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F18 ,jel:F18 ,H23 ,ddc:330 ,jel:Q56 ,Q56 ,jel:H23 - Abstract
A major concern in climate negotiations is that decarbonization may signi cantly hurt the development process. This paper shows that international specialization can contribute to making environmental and economic objectives compatible. When carbon effi ciency di ffers between two trading partners, environmental policy a ffects production cost di fferentially, so that the comparative advantage in technology is endogenous. Under a global climate agreement, a universal carbon tax would shift the production of energy intensive goods towards carbon effi cient economies. Once emissions are correctly internalized, trade becomes unambiguously bene cial for the environment and allows pursuing both environmental objectives and fast economic growth. Even in the absence of a climate agreement, free trade provides the option of indirectly accessing carbon e fficient technology abroad. This improves the marginal rate of substitution between consumption and environmental quality and thus achieves emission reductions even without international cooperation.
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- 2013
20. The fiscal benefits of stringent climate change mitigation: an overview.
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Siegmeier, Jan, Mattauch, Linus, Franks, Max, Klenert, David, Schultes, Anselm, and Edenhofer, Ottmar
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CLIMATE change mitigation ,PARIS Agreement (2016) ,CARBON pricing ,FISCAL policy ,PUBLIC investments ,ENVIRONMENTAL impact charges - Abstract
The Paris Agreement’s very ambitious mitigation goals, notably to ‘pursue efforts’ to limit warming to 1.5°C, imply that climate policy will remain a national affair for some time. One key obstacle to very ambitious national mitigation is that some policy makers perceive this to be in competition with major goals of fiscal policy, such as public investment or debt reduction. However, climate policy may actually contribute to these other objectives. Importantly, many fiscal implications of substantial carbon prices, which are essential for stringent mitigation targets such as the 1.5°C goal, have long been neglected by economic analyses of climate change mitigation. We systematically review recent contributions on interactions between climate policy and public finance, which include many topics beyond the classic `double dividend’ of environmental tax swaps. We can thus identify new conclusions about climate policy designs that may overcome fiscal objections and research gaps. We find that national climate policy often aligns with other objectives, provided that climate policies and fiscal policies are integrated well. A first class of interactions concerns public revenue-raising: carbon pricing can replace distortionary taxes and alleviate international tax competition; climate policy also changes asset values, which impacts the base of non-climate taxes and boosts productive investment. Second, they concern public spending, which needs to be restructured as a part of climate policy, while carbon pricing revenues may be recycled for public investment. Third, distributional impacts of climate policies include changes to household expenditures, to asset values and to employment; balancing them often requires fiscal policies. Our findings underline that jointly considering climate policy and fiscal policy can help to make substantial mitigation politically feasible. Key policy insightsClimate policy, even under a very ambitious 1.5°C target, may substantially contribute to fiscal objectives, interact with fiscal policies, and lower mitigation costs.Mutual effects concern taxation, aggregate investment, public budgets, infrastructure and fiscal instruments with distributional effects.Better integrating climate policies and fiscal policies increases efficiency and supports political feasibility of very ambitious mitigation.This requires a common understanding of policy makers and academics on the most relevant interactions, based on more exchange and empirical research. [ABSTRACT FROM PUBLISHER]
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- 2018
- Full Text
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21. Prices vs. quantities and the intertemporal dynamics of the climate rent
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Kalkuhl, Matthias and Edenhofer, Ottmar
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Hotelling-Regel ,Q32 ,Q54 ,Rohstoffwirtschaft ,H23 ,prices vs. quantities ,climate rent ,Hotelling ,Q38 ,Rententheorie ,Q58 ,intertemporal policy instruments ,Wohlfahrtseffekt ,ddc:330 ,Klimaschutz ,resource extraction ,Policy-Mix ,Theorie - Abstract
This paper provides a formal survey of price and quantity instruments for mitigating global warming. We explicitly consider policies' impact on the incentives of resource owners who maximize their profits intertemporally. We focus on the informational and commitment requirements of the regulator. Furthermore, we study the interplay between (private) resource extraction rent and (public) climate rent and ask how property and management of the climate rent can be assigned between regulator and resource sector. There are only two instruments that unburden the regulator from the complex intertemporal management of the climate rent and associated commitment problems: in the cost-benefit world, we derive a stock-dependent tax rule; in the cost-effective (carbon budget) world, only an emissions trading scheme with free banking and borrowing can shift intertemporal timing decisions completely to the market.
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- 2010
22. Capital beats coal: How collecting the climate rent increases aggregate investment.
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Siegmeier, Jan, Mattauch, Linus, and Edenhofer, Ottmar
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CARBON pricing , *FOSSILS , *NATURAL resources , *MACROECONOMICS , *INVESTMENTS , *CLIMATE change - Abstract
Carbon pricing is the key to decarbonizing the economy, as it regulates emission flows. However, a price on carbon also collects rents from underlying fossil resource stocks, giving rise to unexamined macroeconomic effects. This article shows that if these stocks are tradable, carbon pricing shifts aggregate investment towards alternative assets. If capital is underaccumulated, this implies lower costs of climate policy and a welfare improvement. We prove this beneficial investment shift from fossil stocks towards capital for the case of an emission trading scheme: specifically, we show that the higher the share of auctioned permits, the larger the beneficial investment effect. The same holds for a ‘stock instrument’, under which the right to recurrently receive emission permits is a tradable asset, making the effect robust to trade restrictions on fossil stocks. Our main result contradicts the common perception of a trade-off between climate change mitigation policy and growth. [ABSTRACT FROM AUTHOR]
- Published
- 2018
- Full Text
- View/download PDF
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