 The Grey Paradox: How fossil-fuel owners can benefit from carbon taxationRenaud Coulomb and Fanny Henriet Post-Print from HAL Abstract: This paper considers the distributional impact of optimal carbon taxation on fossil-fuel owners. A carbon-emitting exhaustible resource competes with a dirtier abundant resource and a clean backstop. A time-dependent carbon tax is set to optimally use these resources under a cap constraint over atmospheric concentration. As the cap is tightened, the dirtier resource becomes less competitive compared to the exhaustible resource (the "competition effect"), but the timing and duration of extraction of the exhaustible resource is modified (the "timing effect"). We provide analytical expressions of these effects, and determine conditions over CO2 size of reserves, pollution contents, extraction costs and demand elasticity such that the exhaustible-resource owners' profits increase as the ceiling is tightened. Calibrations for the transport and power sectors suggest that the profits of conventional-oil and natural-gas owners increase compared to a baseline without regulation for plausible carbon-ceiling values. Keywords: OPEC; Carbon taxation; Externality; Global warming; Non-renewable resources (search for similar items in EconPapers) Published in Journal of Environmental Economics and Management, 2018, 87, pp.206-223. ⟨10.1016/j.jeem.2017.07.001⟩ There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01626780 DOI: 10.1016/j.jeem.2017.07.001 Access Statistics for this paper More papers in Post-Print from HAL |
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