Norwegian climate policy reforms in the presence of an international quota market

Geir H. Bjertnæs, Marina Tsygankova and Thomas Martinsen

Energy Economics, 2013, vol. 39, issue C, 147-158

Abstract: This study shows that the second-best optimal difference between tax rates on goods that generate greenhouse gas emissions and non-polluting goods is equal to the quota price plus a Ramsey tax on the quota price when emission quotas are traded between governments and the price elasticity of these goods is identical. This tax difference exceeds the second-best optimal difference between tax rates on goods that generate a negative externality equivalent to the quota price and non-polluting goods. Model simulations show that a unilateral increase in emission tax to above the international quota price generates a welfare gain for Norway. Model simulations also show that an international tax/quota price increase generates a welfare gain (loss) for Norway if Norwegian imports of oil become substantial (marginal) in the long run.

Keywords: Optimal taxation; Double dividend; Emissions (search for similar items in EconPapers)
JEL-codes: F41 H21 Q43 Q48 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:39:y:2013:i:c:p:147-158

DOI: 10.1016/j.eneco.2013.05.001

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