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- ItemPigou in the 21st Century: a tribute on the occasion of the 100th anniversary of the publication of The Economics of Welfare(New York, NY : Springer Science + Business Media B.V., 2021) Edenhofer, Ottmar; Franks, Max; Kalkuhl, MatthiasThe year 2020 marks the centennial of the publication of Arthur Cecil Pigou’s magnum opus The Economics of Welfare. Pigou’s pricing principles have had an enduring influence on the academic debate, with a widespread consensus having emerged among economists that Pigouvian taxes or subsidies are theoretically desirable, but politically infeasible. In this article, we revisit Pigou’s contribution and argue that this consensus is somewhat spurious, particularly in two ways: (1) Economists are too quick to ignore the theoretical problems and subtleties that Pigouvian pricing still faces; (2) The wholesale skepticism concerning the political viability of Pigouvian pricing is at odds with its recent practical achievements. These two points are made by, first, outlining the theoretical and political challenges that include uncertainty about the social cost of carbon, the unclear relationship between the cost–benefit and cost-effectiveness approaches, distributional concerns, fragmented ministerial responsibilities, an unstable tax base, commitment problems, lack of acceptance and trust between government and citizens as well as incomplete international cooperation. Secondly, we discuss the recent political success of Pigouvian pricing, as evidenced by the German government’s 2019 climate policy reform and the EU’s Green Deal. We conclude by presenting a research agenda for addressing the remaining barriers that need to be overcome to make Pigouvian pricing a common political practice.
- ItemShort term policies to keep the door open for Paris climate goals(Bristol : IOP Publ., 2018) Kriegler, Elmar; Bertram, Christoph; Kuramochi, Takeshi; Jakob, Michael; Pehl, Michaja; Stevanović, Miodrag; Höhne, Niklas; Luderer, Gunnar; Minx, Jan C; Fekete, Hanna; Hilaire, Jérôme; Luna, Lisa; Popp, Alexander; Steckel, Jan Christoph; Sterl, Sebastian; Yalew, Amsalu Woldie; Dietrich, Jan Philipp; Edenhofer, OttmarClimate policy needs to account for political and social acceptance. Current national climate policy plans proposed under the Paris Agreement lead to higher emissions until 2030 than cost-effective pathways towards the Agreements' long-term temperature goals would imply. Therefore, the current plans would require highly disruptive changes, prohibitive transition speeds, and large long-term deployment of risky mitigation measures for achieving the agreement's temperature goals after 2030. Since the prospects of introducing the cost-effective policy instrument, a global comprehensive carbon price in the near-term, are negligible, we study how a strengthening of existing plans by a global roll-out of regional policies can ease the implementation challenge of reaching the Paris temperature goals. The regional policies comprise a bundle of regulatory policies in energy supply, transport, buildings, industry, and land use and moderate, regionally differentiated carbon pricing. We find that a global roll-out of these policies could reduce global CO2 emissions by an additional 10 GtCO2eq in 2030 compared to current plans. It would lead to emissions pathways close to the levels of cost-effective likely below 2 °C scenarios until 2030, thereby reducing implementation challenges post 2030. Even though a gradual phase-in of a portfolio of regulatory policies might be less disruptive than immediate cost-effective carbon pricing, it would perform worse in other dimensions. In particular, it leads to higher economic impacts that could become major obstacles in the long-term. Hence, such policy packages should not be viewed as alternatives to carbon pricing, but rather as complements that provide entry points to achieve the Paris climate goals.