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search.filters.applied.f.access: openAccess Ă— Subject: Carbon price Ă—

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    Optimal carbon taxation and horizontal equity: A welfare-theoretic approach with application to German household data
    (Amsterdam : Elsevier, 2022) Hänsel, Martin C.; Franks, Max; Kalkuhl, Matthias; Edenhofer, Ottmar
    We develop a model of optimal taxation and redistribution under an ambitious climate target. We take into account vertical income differences, but also explicitly capture horizontal equity concerns by considering heterogeneous energy efficiencies. By deriving first- and second-best rules for policy instruments including carbon and labor taxes, transfers and energy subsidies, we investigate analytically how vertical and horizontal inequality is considered in the welfare maximizing tax structure. We calibrate the model to German household data and a 30 percent emission reduction goal and show that redistribution of carbon tax revenues via household-specific transfers is the first-best policy. Under plausible assumptions on inequality aversion, transfers to energy-intensive households should be about five times higher than transfers to energy-efficient households. Equal per-capita transfers do not require to observe households’ efficiency type, but increase equity-weighted mitigation costs by around 5 percent compared to the first-best. Mitigation costs increase by less, if the government can implement a uniform clean energy subsidy or household-specific tax-subsidy schemes on energy consumption and labor income that target heterogeneous energy efficiencies. Horizontal equity concerns may therefore constitute a new second-best rationale for clean energy policies or differentiated energy taxes.
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    Producing Policy-relevant Science by Enhancing Robustness and Model Integration for the Assessment of Global Environmental Change
    (Amsterdam [u.a.] : Elsevier Science, 2019) Warren, R.F.; Edwards, N.R.; Babonneau, F.; Bacon, P.M.; Dietrich, J.P.; Ford, R.W.; Garthwaite, P.; Gerten, D.; Goswami, S.; Haurie, A.; Hiscock, K.; Holden, P.B.; Hyde, M.R.; Joshi, S.R.; Kanudia, A.; Labriet, M.; Leimbach, M.; Oyebamiji, O.K.; Osborn, T.; Pizzileo, B.; Popp, A.; Price, J.; Riley, G.D.; Schaphoff, S.; Slavin, P.; Vielle, M.; Wallace, C.
    We use the flexible model coupling technology known as the bespoke framework generator to link established existing modules representing dynamics in the global economy (GEMINI_E3), the energy system (TIAM-WORLD), the global and regional climate system (MAGICC6, PLASIM-ENTS and ClimGEN), the agricultural system, the hydrological system and ecosystems (LPJmL), together in a single integrated assessment modelling (IAM) framework, building on the pre-existing framework of the Community Integrated Assessment System. Next, we demonstrate the application of the framework to produce policy-relevant scientific information. We use it to show that when using carbon price mechanisms to induce a transition from a high-carbon to a low-carbon economy, prices can be minimised if policy action is taken early, if burden sharing regimes are used, and if agriculture is intensified. Some of the coupled models have been made available for use at a secure and user-friendly web portal. © 2018 The Authors