Complementary taxation of carbon emissions and local air pollution

Mathias Mier, Jacqueline Adelowo and Christoph Weissbart

Energy Economics, 2024, vol. 132, issue C

Abstract: Current decarbonization policies neglect damages from local air pollutants. We analyze the trade-off between complementary taxation of carbon emissions and local air pollution. We quantify results for the European power market until 2050. Taxing only air pollution results in system cost of 6,475 billion € and fosters nuclear deployment. Additional external cost accumulate to 5,890 billion €. Taxing only carbon yields system (external) cost of 8,263 (717) billion € and promotes carbon-capture-and-storage deployment. Taxing both yields (external) cost of 7,697 (1,118) billion €. Moderate carbon taxation can be complementary to a primary policy of air pollution abatement. On the contrary, a primary policy of decarbonization stands in trade-off with air pollution abatement in the long-term.

Keywords: Taxation; External cost; Air pollution; Carbon emission; Externality; Energy system model; Power market model; Decarbonization (search for similar items in EconPapers)
JEL-codes: C61 H21 H23 H43 L94 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:132:y:2024:i:c:s0140988324001683

DOI: 10.1016/j.eneco.2024.107460

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