Economics Dictionary of Arguments
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> Fankhauser,
Samuel
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> Carbon
Pricing
Summary
Fankhauser I 1
Carbon Pricing/Carattini/Carvalho/
Fankhauser: (…) to keep the rise in
global mean temperatures well
below 2°C above preindustrial
levels (…) requires a variety of
policy interventions, including
subsidies to support the
breakthrough of low-carbon
technologies, regulatory standards
to drive down the energy use of
buildings, cars and appliances, and
financing schemes to overcome
capital constraints (Bowen &
Fankhauser, 2017)(1). However, an
effective carbon price is essential to
avoid more severe interferences
with the climate system (Stiglitz et
al., 2018)(2). Only if the emitters of
greenhouse gases face the full
environmental costs of their actions
will they manage their carbon
emissions effectively. Carbon
pricing alters relative prices, leading
to an automatic adjustment in
behavior by firms and consumers,
and creating a continuous incentive
for investments in low-carbon
technological improvements. It
works as a decentralized policy, in
that it does not require regulators to
Meta data
Fankhauser I
Samuel Fankhauser
Stefano Carattini
Maria Carvalho,
Overcoming public
resistance to carbon
taxes 2018
Economics Dictionary of Arguments
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have information on marginal
abatement costs. Agents react to
the carbon price based on their
marginal abatement cost. By
exploiting heterogeneity in marginal
abatement costs, carbon pricing
allows reducing the overall
abatement cost (Weitzman,
1974)(3).
Emissions Trading: Until now,
emissions trading has been the
carbon pricing instrument of choice
in most jurisdictions. In the
European Union, the EU Emissions
Trading System (EU ETS) covers
almost half of total greenhouse gas
emissions. Carbon is also traded in
Canada, China, New Zealand,
Switzerland, and the United States,
although most of these schemes
are limited in their regional or
sectoral scope (World Bank,
2016)(4). >Carbon
Taxation/Fankhauser.
1. Bowen, A., & Fankhauser, S.
(2017). Good practice in low-carbon
policy. In A. Averchenkova, S.
Fankhauser, & M. Nachmany
(Eds.), Climate change legislation
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(pp. 123–140). London, England:
Edward Elgar.
2. Stiglitz, J. E., Stern, N., Duan, M.,
Edenhofer, O., Giraud, G., Heal, G.,
La Rovere, E. L., Morris, A., Moyer,
E., Pangestu, M., Shukla, P. R.,
Sokona, Y., & Winkler, H. (2018).
Report of the High-Level
Commission on Carbon Prices.
Carbon Pricing Leadership
Coalition.
3. Weitzman, M. L. (1974). Prices
vs. quantities. The Review of
Economic Studies, 41(4), 477–491.
4. World Bank. (2016). State and
trends of carbon pricing 2016.
Washington, DC: Author.
Stefano Carattini, Maria Carvalho &
Sam Fankhauser, 2018:
“Overcoming public resistance to
carbon taxes”. In: Stéphane
Hallegatte, Mike Hulme (Eds.),
WIREs Climate Change, Vol. 9/5,
pages 1-26.
_____________
Explanation of symbols: Roman numerals
indicate the source, arabic numerals indicate
the page number. The corresponding books
are indicated on the right hand side. ((s)…):
Comment by the sender of the contribution.
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The note [Author1]Vs[Author2] or
[Author]Vs[term] is an addition from the
Dictionary of Arguments. If a German edition
is specified, the page numbers refer to this
edition.
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