Overlapping Climate Policies
60 Pages Posted: 3 Jan 2022 Last revised: 21 Mar 2023
There are 3 versions of this paper
Overlapping Climate Policies
Overlapping Climate Policies
Overlapping Climate Policies
Date Written: July 11, 2022
Abstract
The world is under pressure to deliver on the 2015 Paris Climate Agreement. Individual jurisdictions are enacting policies such as phasing out coal, taxing aviation, and supporting renewable energy. These often overlap with a wider multi-jurisdictional carbon-pricing system like the EU’s Emissions Trading System. We develop a general framework to study how such "overlapping climate policies" can help combat climate change---depending on their design, location and timing. Some policies are truly complementary while others backfire by raising aggregate emissions. At a conceptual level, our model encompasses most carbon-pricing systems used in practice and a wide range of popular unilateral policies.
Keywords: overlapping policy, internal carbon leakage, waterbed effect, cap-and-trade, carbon pricing, hybrid regulation
JEL Classification: H23, Q54
Suggested Citation: Suggested Citation