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A Tax-Based Approach to Slowing Global Climate Change

Joseph E. Aldy (), Eduardo Ley and Ian Parry ()

Discussion Papers from Resources For the Future

Abstract: 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 tax should be imposed upstream with incentives for downstream sequestration and abatement of other greenhouse gases. At the international level, a key challenge is the possibility that emissions taxes might be undermined through offsetting changes in other energy policies.

Keywords: Global climate change; CO2 tax; cap-and-trade; policy design (search for similar items in EconPapers)
JEL-codes: Q54 Q58 H23 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ene and nep-env
Date: 2008-07-15
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