This paper concerns the optimal regulation of greenhouse gases that lead to global climate Ž change. In particular, we focus on uncertainty and learning which, over time, resolves . uncertainty . We present an empirical stochastic model of climate]economy interactions and present results on the tension between postponing control until more is known vs acting now before irreversible climate chan...

In this paper, we discuss the design of carbon dioxide (CO2) taxes at the domestic and international level and the choice of taxes versus a cap-and-trade system. A strong case can be made for taxes on uncertainty, fiscal, and distributional grounds, though this critically hinges on policy specifics and how revenues are used. The efficient near-term tax is at least $5–$20 per ton of CO2 and the ...

This paper examines alternative ways that the value of CO2 emissions allowances created under cap-and-trade policy could be returned to households. One approach (based on principles of economic efficiency) is effectively a “tax shift” that would use revenues from an auction of CO2 emissions allowances to reduce preexisting distortionary taxes. A second approach (based on principles of property ...

Modeling the optimal bid of wind power producers as price-makers is paramount for understanding the effect of their large-scale participation in electricity markets. We consider the problem of a wind power producer being a price-taker in the day-ahead market, but a price-maker in the balancing market, who aims at optimizing the expected revenues from these market floors. The problem is formulat...

BACKGROUND Global carbon stocks in forest biomass are decreasing by 1.1 Gt of carbon annually, owing to continued deforestation and forest degradation. Deforestation emissions are partly offset by forest expansion and increases in growing stock primarily in the extra-tropical north. Innovative financial mechanisms would be required to help reducing deforestation. Using a spatially explicit inte...

The paper examines the impact of pricing carbon emissions in the Russian electricity supply industry. We …nd that emissions are reduced at any level of the carbon price. Most active fuel switching takes place at the carbon tax of 200...500 Roubles per tonne of CO2; but the e¤ect is uneven by zones. The social surplus turns out to be positive. A special case of a new interconnector "Ural Siberia...

Embodied carbon tariffs tax the direct and indirect carbon emissions embodied in trade — an idea popularized by countries seeking to extend the reach of domestic carbon regulations. We investigate their effectiveness using simulations from an applied general equilibrium model of global trade and energy use. We find that the tariffs do reduce foreign emissions, but their ability to improve the g...

Deforestation is estimated to cause about one quarter of anthropogenic carbon emissions. Only late, in 2005, Parties to the United Nations Framework Convention for Climate Change decided to start exploring approaches to reduce emissions from this major source. We carried out a global analysis of the potential effects of financial mechanisms to avoid deforestation. Avoiding deforestation is a lo...