Climate Policy Enhances Efficiency: A Macroeconomic Portfolio Effect

Siegmeier, Jan; Mattauch, Linus; Edenhofer, Ottmar

doi:10.2139/ssrn.2555565

Cited by 4 publications

(2 citation statements)

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“…It is an interaction that enhances welfare beyond its environmental benefits if capital was otherwise underaccumulated (Siegmeier et al (2015), building on Feldstein (1977) and Edenhofer et al (2015b)). 8 The basic argument holds independent of uncertainties about the costs of exploration, extraction and substitute technologies, or the size of fossil reserves.…”

Section: Effects When Environmental and Finance Ministers Do Not Coor...mentioning

confidence: 99%

“…8 The basic argument holds independent of uncertainties about the costs of exploration, extraction and substitute technologies, or the size of fossil reserves. In practice, the strength of the effect will mainly depend on implementation details of the carbon price (fully auctioned emission permits may collect more rents than a variable carbon tax), on the amount of fossil assets that are covered, and on their importance in investors' portfolios (Siegmeier et al (2015); Battiston et al 7 Carbon pricing revenues in developed countries may not enter the general public budget, but could be ´earmarked' to finance international transfers in support of climate change mitigation in developing countries (see for example Bowen (2011) or Jones et al (2013)). This would neutralize some interactions in this and following sections that rely on revenue recycling.…”

Section: Effects When Environmental and Finance Ministers Do Not Coor...mentioning

confidence: 99%

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The fiscal benefits of stringent climate change mitigation: an overview

et al. 2017

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The Paris Agreement's very ambitious mitigation goals, notably to "pursue efforts" to limit warming to 1.5°C, imply that climate policy will remain a national affair for some time. One key obstacle to very ambitious national mitigation is that some policymakers perceive this to be in competition with major goals of fiscal policy, such as public investment or debt reduction. However, climate policy may actually contribute to these other objectives. Importantly, many fiscal implications of substantial carbon prices, which are essential for stringent mitigation targets such as the 1.5°C goal, have long been neglected by economic analyses of climate change mitigation.We systematically review recent contributions on interactions between climate policy and public finance, which include many topics beyond the classic `double dividend' of environmental tax swaps.We can thus identify new conclusions about climate policy designs that may overcome fiscal objections and research gaps. We find that national climate policy often aligns with other objectives, provided that climate-and fiscal policies are integrated well.A first class of interactions concerns public revenue-raising: carbon pricing can replace distortionary taxes and alleviate international tax competition; climate policy also changes asset values, which impacts the base of non-climate taxes and boosts productive investment. Second, they concern public spending, which needs to be restructured as a part of climate policy, while carbon

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Section: Effects When Environmental and Finance Ministers Do Not Coor...mentioning

confidence: 99%