Please Note: If you are not a federal government employee and would like to attend a seminar, please contact Carl Pasurka (firstname.lastname@example.org) in advance so that you can gain access to the building unless someone else is listed in the seminar write-up.
Climate Economics Seminar: How Much Carbon Pricing is in Countries’ Own Interests? The Critical Role of Co-Benefits
September 24, 2015, 10:30 - 12
Room 4128, William Jefferson Clinton West Building, 1301 Constitution Ave., NW, Washington, DC
Ian Parry (Principal Environmental Fiscal Policy Expert, Fiscal Affairs Department, IMF)
EPA Contact: Carl Pasurka, 202-566-2275
Abstract: This paper calculates, for the top twenty emitting countries, how much pricing of carbon dioxide (CO2) emissions is in their own national interests due to domestic co-benefits (leaving aside the global climate benefits). On average, nationally efficient prices are substantial, $57.5 per ton of CO2 (for year 2010), reflecting primarily health co-benefits from reduced air pollution at coal plants and, in some cases, reductions in automobile externalities (net of fuel taxes/subsidies). Pricing co-benefits reduces CO2 emissions from the top twenty emitters by 13.5 percent (a 10.8 percent reduction in global emissions). However, co-benefits vary dramatically across countries (e.g., with population exposure to pollution) and differentiated pricing of CO2 emissions therefore yields higher net benefits (by 23 percent) than uniform pricing. Importantly, the efficiency case for pricing carbon’s co-benefits hinges critically on (i) weak prospects for internalizing other externalities through other pricing instruments and (ii) productive use of carbon pricing revenues.