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Maximum Carbon Taxes in the Short Run

Richard Tol

Working Paper Series from Department of Economics, University of Sussex Business School

Abstract: A cap is imposed on the carbon tax rate if the total tax revenue is not allowed to increase. Using recent data on the carbon-intensity of the economy and the overall tax take, I show that this cap constrains almost any climate policy in at least some countries. A larger number of countries, emitting a substantial share of global carbon dioxide, cannot fully participate if the carbon tax (or equivalent alternative regulation) is high enough to meet the 2ºC target. For that target, the carbon tax revenue in 2020 is greater than 10% of total tax revenue in every country.

Keywords: climate policy; carbon tax; target setting (search for similar items in EconPapers)
JEL-codes: H21 Q54 (search for similar items in EconPapers)
Date: 2012-04
New Economics Papers: this item is included in nep-acc, nep-ene, nep-env, nep-pbe and nep-pub
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Persistent link: https://EconPapers.repec.org/RePEc:sus:susewp:3312

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