How Much Carbon Pricing is in Countries' Own Interests? The Critical Role of Co-Benefits
35 Pages Posted: 22 Oct 2014
Date Written: October 21, 2014
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. 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. 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.
Keywords: carbon pricing, co-benefits, air pollution, fuel taxes, top twenty emitters
JEL Classification: H23, Q48, Q54, Q58
Suggested Citation: Suggested Citation