This CESifo Working Paper by Ian Parry (IMF) provides some brief reflections on the international coordination of carbon pricing. The efficiency effects of carbon pricing depend on how it impacts distortions in fossil fuel markets, most notably from local air pollution externalities. By offsetting these distortions, carbon pricing may generate significant net economic benefits, so it is in countries own interests to implement carbon pricing unilaterally rather than waiting for others to act. Net benefits are further enhanced if carbon pricing is revenue neutral and broader taxes cause substantial avoidance and evasion. Flexible international pricing regimes, allowing countries with high domestic environmental benefits or fiscal needs to set higher carbon prices, are more efficient than globally uniform carbon prices.
February 5, 2018
Impacts of a global carbon price on consumption and value creation – Implications for carbon pricing design (Generation Foundation and Ecofys)
March 31, 2017
From Challenge to Opportunity: Shadow Country Reports in Support of the European Semester Cycle (GBE, CEE BankWatch, EEB)
March 17, 2017