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Author: Edenhofer, Ottmar × Publisher: Amsterdam : Elsevier ×

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Now showing 1 - 4 of 4
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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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    Fossil-fueled development (SSP5): An energy and resource intensive scenario for the 21st century
    (Amsterdam : Elsevier, 2016) Kriegler, Elmar; Bauer, Nico; Popp, Alexander; Humpenöder, Florian; Leimbach, Marian; Strefler, Jessica; Baumstark, Lavinia; Bodirsky, Benjamin Leon; Hilaire, Jérôme; Klein, David; Mouratiadou, Ioanna; Weindl, Isabelle; Bertram, Christoph; Dietrich, Jan-Philipp; Luderer, Gunnar; Pehl, Michaja; Pietzcker, Robert; Piontek, Franziska; Lotze-Campen, Hermann; Biewald, Anne; Bonsch, Markus; Giannousakis, Anastasis; Kreidenweis, Ulrich; Müller, Christoph; Rolinski, Susanne; Schultes, Anselm; Schwanitz, Jana; Stevanovic, Miodrag; Calvin, Katherine; Emmerling, Johannes; Fujimori, Shinichiro; Edenhofer, Ottmar
    This paper presents a set of energy and resource intensive scenarios based on the concept of Shared Socio-Economic Pathways (SSPs). The scenario family is characterized by rapid and fossil-fueled development with high socio-economic challenges to mitigation and low socio-economic challenges to adaptation (SSP5). A special focus is placed on the SSP5 marker scenario developed by the REMIND-MAgPIE integrated assessment modeling framework. The SSP5 baseline scenarios exhibit very high levels of fossil fuel use, up to a doubling of global food demand, and up to a tripling of energy demand and greenhouse gas emissions over the course of the century, marking the upper end of the scenario literature in several dimensions. These scenarios are currently the only SSP scenarios that result in a radiative forcing pathway as high as the highest Representative Concentration Pathway (RCP8.5). This paper further investigates the direct impact of mitigation policies on the SSP5 energy, land and emissions dynamics confirming high socio-economic challenges to mitigation in SSP5. Nonetheless, mitigation policies reaching climate forcing levels as low as in the lowest Representative Concentration Pathway (RCP2.6) are accessible in SSP5. The SSP5 scenarios presented in this paper aim to provide useful reference points for future climate change, climate impact, adaption and mitigation analysis, and broader questions of sustainable development.
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    The strategic dimension of financing global public goods
    (Amsterdam : Elsevier, 2020) Kornek, Ulrike; Edenhofer, Ottmar
    One challenge in addressing transboundary problems such as climate change is the incentive to free-ride. Transfers from multilateral compensation funds are often used to counteract such incentives, albeit with varying success. We examine how such funds can change the incentive to free-ride in a global public-goods game. In our game, self-interested countries choose their own preferred course, deciding their voluntary public good provision, whether to join a fund that offers compensation for providing the public good and the volume of compensatory payments. We show that (i) total public-good provision is higher when those contributing are given more compensation; and (ii) non-participation in the fund can be punished if the remaining members decrease their public-good provision sufficiently. We then examine three specific fund designs. In the first, the compensation paid to each country is equal to the percentage of above-average total costs for public-goods provision. This design is best able to deter free-riding and can establish the social optimum as the equilibrium. In the second, the compensation paid to each country is a function of the marginal cost of their public-good provision. Here there are significant incentives to free-ride. In the third case, the monetary resources provided by the fund are fixed, a design frequently encountered in international funds. This design is the one least able to deter free-riding. © 2020 The Author(s)
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    CCS-Bonds as a superior instrument to incentivize secure carbon sequestration
    (Amsterdam : Elsevier, 2009) Held, Hermann; Edenhofer, Ottmar
    Geological sequestration of CO2 on a massive scale implies that large area fractions of the underground could become flooded by CO2, imposing a unprecedented regulatory challenge to environmental authorities. Therefore we propose carbon sequestration bonds as complementary, market-based instruments that should further help to manage the risk of decadal-scale CO2 leakage. Such bond schemes address market failures that could occur if the investment behavior of operators under uncertainty differed from society’s preference. For a stylized setup we demonstrate that our bond system has the potential to simultaneously address regulatory challenges stemming from information asymmetries and diverging orders of preference.