A Tax–Based Approach to Slowing Global Climate Change

Joseph Aldy, Eduardo Ley and Ian Parry

National Tax Journal, 2008, vol. 61, issue 3, 493-517

Abstract: This paper discusses the design of CO2 taxes at the domestic and international level and the choice of taxes versus cap and trade. There is a strong case 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.

Date: 2008
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Working Paper: A Tax-Based Approach to Slowing Global Climate Change (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:ntj:journl:v:61:y:2008:i:3:p:493-517

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