A carbon tax would penalize carbon intensive fuels like gasoline and shift fuel consumption to less carbon intensive alternatives like biofuels. Since biofuel production competes for land with agriculture, a carbon tax could raise land rents, divert land towards fuel production, and raise agricultural prices. This paper analyzes the welfare effect of a carbon tax on fuel with gasoline and biofu...

To meet the targets of the Kyoto Protocol, European Union has established the European Emission Trading Scheme, a mandatory market for carbon emission allowances. This regulatory framework has introduced a market for emission allowances and created a variety of emission-related financial instruments. In this work, we show that the economic mechanism of carbon allowance price formation can be fo...

We demonstrate that the carbon tax imposed by the Canadian province of British Columbia, a unique carbon pricing policy that comprehensively applies to all fossil fuels, caused a decline in short-run gasoline demand that is significantly greater than would be expected from an equivalent increase in the market price of gasoline. That the carbon tax is more salient, or yields a larger change in d...

Forests make up large ecosystems and by the uptake of carbon dioxide can play an important role in mitigating the greenhouse effect. In this study, mitigation of carbon emissions through carbon uptake and storage in forest biomass and the use of forest biofuel for fossil fuel substitution were considered. The analysis was performed for a 3.2 million hectare region in northern Sweden. The object...

We analyse welfare effects of supporting general versus emission saving technological development when carbon emissions are regulated by a carbon tax. We use a computable general equilibrium model with induced technological change (ITC). ITC is driven by two separate, economically motivated research and development (R&D) activities, one general and one emission saving specified as carbon captur...

Carbon allowance auctions are a component of existing and proposed regional cap-and-trade programs in the U.S. and are also included in recent bills in the U.S. Congress that would establish a national cap-and-trade program in the U.S. to regulate greenhouse gases (“carbon”). We discuss and evaluate the two leading candidates for the auction format for carbon allowance auctions: a uniform-price...

Carbon allowance auctions are a component of existing and proposed regional cap-and-trade programs in the U.S. and are also included in recent bills in the U.S. Congress that would establish a national cap-and-trade program in the U.S. to regulate greenhouse gases (“carbon”). We discuss and evaluate the two leading candidates for the auction format for carbon allowance auctions: a uniform-price...

This paper employs the quadratic directional output distance function to derive shadow prices of China’s aggregate carbon emissions at the province level between 1997 and 2010. The empirical results indicate that the national weighted average shadow price presents an “N-shape” curve across the sample period, experiencing the initial phase of growth followed by a phase of deterioration, and then...

The central pillar of European climate policy, the European Emissions Trading System (EU ETS), is currently under scrutiny, as the allowance price is persistently low at around 5€/tCO2. The cap was met and emissions actually declined in recent years, ensuring the environmental effectiveness of the scheme. However, the low price may affect the long-term cost-effectiveness of the instrument by re...

Section 15.2 discusses the importance of designing policies in a way which creates confidence in the future existence of a robust carbon price, so that businesses and individuals can plan their investment decisions accordingly. The current use of emissions trading schemes is discussed in Section 15.3, and 15.4 focuses particularly on the issues around creating a credible carbon price in emissio...