How to implement a fair and progressive carbon price to fight climate change?

Raphaël-Homayoun Boroumand, Stéphane Goutte, Thomas Porcher and Thomas Stocker ()
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Raphaël-Homayoun Boroumand: City University London
Thomas Stocker: NCCR PlanetS - National Centre of Competence in Research PlanetS - Physikalisches Institut [Bern] - UNIBE - Universität Bern = University of Bern = Université de Berne - SNSF - Swiss National Science Foundation

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Abstract: The principle of "common but differentiated responsibility", a key concept of the United Nations Framework Convention on Climate Change (UNFCCC), acknowledges the conditions for a generally acceptable and differentiated pricing mechanism on carbon emissions. With reference to this principle, carbon price determination has become one of the necessary instruments to limit global warming to a maximum of 2 °C. In this article, we propose the allocation of a carbon price per country based on the Human Development Index (HDI) and 0 2 emissions per capita. We demonstrate that under a multilateral framework, the price of carbon would be fixed according to a reference price depending on the HDI and 0 2 emissions. For example, if a country emits more than the amount allocated to its HDI level, it will have to pay a higher price than the established reference price, and vice versa. Reference prices as functions of HDIs and emissions will be estimated based on a trajectory to reach the target goal of reducing carbon dioxide emissions. A key element of our proposed scheme is that it generates national revenue allowing high-emitting countries a rapid decarbonization and developing countries (with generally lower emissions) accelerated development and early implementation of green infrastructures. Our research goal is related to documenting the benefits of a differentiated and progressive carbon pricing mechanism to ease intergovernmental cooperation.

Keywords: climate; carbon; price; market; tax (search for similar items in EconPapers)
Date: 2020-05-20
New Economics Papers: this item is included in nep-ene and nep-env
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