Second-best climate policy

Arbeitspapier

Countries with an active climate policy often use several other policy instruments in addition to a price on carbon emissions, such as subsidies to renewable energy. An obvious reason for subsidizing alternatives to carbon energy is that the price of carbon emissions is too low. The paper derives implications for a second-best climate policy if for some reason the price of carbon emissions is lower than the Pigovian level, and also discusses reasons policy makers might have for setting the tax rate at an inefficiently low level. Even if the current tax rate is optimally set, governments cannot commit to future tax rates. In some cases this inabilty to commit may justify subsidies to investments in renewable energy.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Memorandum ; No. 04/2012

Classification and Topics

• Classification: Wirtschaft ; Alternative Energy Sources ; Energy: Government Policy ; Climate; Natural Disasters and Their Management; Global Warming ; Environmental Economics: Government Policy
• Subject: carbon tax ; subsidies ; commitment ; Klimaschutz ; Ökosteuer ; Förderung erneuerbarer Energien ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Hoel, Michael
• Event: Veröffentlichung
• (who): University of Oslo, Department of Economics
• (where): Oslo
• (when): 2012

Further information

• Handle: http://hdl.handle.net/10419/90769
• Last update: 10.03.2025, 11:46 AM CET