Estimating the CO2 emission and revenue effects of carbon pricing

Abstract

 ECO/WKP(2022)33Unclassified OECD Working Papers should not be reported as representing the official views of the OECD or of its member countries. The opinions expressed and arguments employed are those of the author(s).Working Papers describe preliminary results or research in progress by the author(s) and are published to stimulate discussion on a broad range of issues on which the OECD works.Comments on Working Papers are welcomed, and may be sent to the Economics Department,

Towards net zero in the Czech Republic

“…Once the currently elevated prices of energy subside, the introduction of an explicit carbon price would send consistent signals across the economy and incentivise households and firms to shift consumption patterns and investment decisions towards products with lower GHG-emissions. Research shows that an increase in the OECD's Effective Carbon Rates (ECR) of 10 EUR can decrease emissions by 3.7% in the long run (D'Arcangelo et al, 2022b). With the introduction of a carbon price, the current composition of fuel taxes in the Czech Republic should be shifted so that all prices of fuels and the use of energy better reflect their carbon content and impacts (OECD, 2022b).…”

Driving low-carbon innovations for climate neutrality

“…Standards have been a key instrument for implementing environmental policy, for example in air quality and waste regulation, and have been the driving force behind the development of clean technologies such as scrubbers, catalytic converters, and incineration plants (Vollebergh and van der Werf, 2014 [87]). As such, they can effectively complement emission pricing and incentive-based policies to create demand for lowcarbon innovations and induce technological change (D'Arcangelo et al, 2022 [88]).…”

“…Such behavioral anomalies provide support for policies such as product labelling or minimum performance standards that reduce the burdens on consumers to seek out energy-efficient products. They can also be helpful to restrict and phase out high-emitting activities or technologies that are particularly undesirable (D'Arcangelo et al, 2022 [88]).…”

Identifying and tracking climate change mitigation strategies

“…the year 2077 is imputed for countries without a net-zero target date). 7 This assumption could lead to underestimate stringency in case a policy exists but there is no available information regarding its stringency (i.e. the value is missing).…”

“…There is a growing international consensus that well-designed mitigation strategies need to span a variety of policy instruments tailored to country specific circumstances (D'Arcangelo et al, 2022 [7]; Blanchard, Gollier and Tirole, 2022 [8]; van den Bergh et al, 2021 [9]). Mitigation policy instruments have multiple effects and combining them can address multiple market failures, generate complementarities and improve the cost-effectiveness of the overall mitigation policy strategy (Peñasco, Anadón and Verdolini, 2021 [10]).…”