Strategic Climate Policy with Offsets and Incomplete Abatement : Carbon Taxes Versus Cap-and-Trade

Strand, Jon

关键词: ABATEMENT;    AGGREGATE DEMAND;    AMOUNT OF ABATEMENT;    AMOUNT OF EMISSIONS;    CAPS;   

DOI  :  10.1596/1813-9450-5675
RP-ID  :  WPS5675

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

This paper provides a first analysis ofoptimal offset policies by a "policy bloc" offossil fuel importers implementing a climate policy, facinga (non-policy) fringe of other importers, and a bloc of fuelexporters. The policy bloc uses either a carbon tax or acap-and-trade scheme, jointly with a fully efficient offsetmechanism for reducing emissions in the fringe. The policybloc is then shown to prefer a tax over a cap-and-tradescheme, since 1) a tax extracts more rent as fuel exportersreduce the export price, and more so when the policy bloc islarger relative to the fringe; and 2) offsets are morefavorable to the policy bloc under a tax than under acap-and-trade scheme. The optimal offset price under acarbon tax is half the tax rate; under a cap-and-tradescheme the quota and offset price are equal. The domesticcarbon and offset price are both higher under a tax thanunder a cap-and-trade scheme when the policy bloc is small;when it is larger the offset price can be higher under acap-and-trade scheme. Fringe countries gain by mitigation inthe policy bloc, and more under a carbon tax since the fuelimport price is lower, and since the price obtained whenselling offsets is often higher (always so for a large fringe).