Table of Contents

Carbon Pricing

Carbon Pricing

Design, Experiences and Issues

Critical Issues in Environmental Taxation series

Edited by Larry Kreiser, Mikael S. Andersen, Birgitte E. Olsen, Stefan Speck, Janet E. Milne and Hope Ashiabor

Carbon Pricing reflects upon and further develops the ongoing and worthwhile global debate into how to design carbon pricing, and how to utilize the financial proceeds in the best possible way for society. The world has recently witnessed a significant downward adjustment in fossil fuel prices, which has negative implications for the future of our environment. In light of these negative developments, it is important to understand the benefits of environmental sustainability through well-documented research. This discerning book considers the design of carbon taxes and examines the consequential outcomes of different taxation compositions as regulatory instruments. Expert contributors assess a variety of national experiences to provide an empirical insight into the use of carbon taxes, emissions trading, energy taxes and excise taxes. The overarching discussion concludes that successful policies used by some countries can be implemented in other jurisdictions with minimum new research and experimentation.

Chapter 6: The Regensburg Model: emission trading between countries based on a global CO2 budget, national emission pathways and gradual climate justice

Manfred Sargl, Andreas Wolfsteiner and Günter Wittmann

Subjects: economics and finance, economics of innovation, environment, energy policy and regulation, environmental law, law - academic, environmental law, tax law and fiscal policy, politics and public policy, environmental politics and policy

Extract

According to the Intergovernmental Panel on Climate Change (IPCC), global warming can still be limited to 2°C, and, as Professor Otmar Edenhofer (Co-Chair of IPCC Working Group III) noted at a press conference held by his Working Group: ‘It wouldn’t cost the earth to save the planet’. Discussions about reaching the 2°C target often dismiss an important property of CO2: it stays in the atmosphere for a long time. Thus, it will not suffice to determine reduction targets to be reached by one specific point in time. The crucial determining factor is the future cumulative anthropogenic CO2 emissions. The IPCC has therefore published a cumulative CO2 budget of 2,900 Gt, starting from the onset of industrialization (with a range of 2,550 to 3,150 Gt depending on non-CO2 drivers), which will meet the 2°C target with a probability of over 66 per cent. Between then and 2011 about 1,890 Gt had already been emitted. At the 2010 World Climate Conference in Cancun the 2°C target was set politically, based on scientific evidence. The logical next step would now be to determine a CO2 budget compatible with this target. In this chapter, we will present a proposal for the distribution of the remaining budget between the individual countries in a fair and economically sensible way (effort sharing) following a top-down approach, showing how this can be combined with an emission trading scheme between states.

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