Climate change and carbon tax expectations

Arbeitspapier

If investors fear that future carbon taxes will be lower than currently announced by policy makers, long-run investments in greenhouse gas mitigation may be smaller than desirable. On the other hand, owners of a non-renewable carbon resource that underestimate future carbon taxes will postpone extraction compared with what they would have chosen had the policymakers been able to commit to the optimal tax path. If extraction costs rise rapidly as accumulated extraction rises, near-term emissions increase as a consequence of a downward bias in the expected future carbon taxes. Whether investments in greenhouse gas mitigation go up or down due to the expectation error depends on the time profile of the returns to the investment.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 2966

Classification and Topics

• Classification: Wirtschaft ; Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies ; Nonrenewable Resources and Conservation: General ; Alternative Energy Sources ; Climate; Natural Disasters and Their Management; Global Warming
• Subject: climate change ; exhaustible resources ; carbon tax ; Klimaveränderung ; Ökosteuer ; Optimale Besteuerung ; Fossiler Energieträger ; Kohlendioxid ; Treibhausgas ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Hoel, Michael
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2010

Further information

• Handle: http://hdl.handle.net/10419/30723
• Last update: 10.03.2025, 11:42 AM CET