The simple arithmetic of carbon pricing and stranded assets
A simple rule for the optimal global price of carbon is presented, which captures the geo-physical, economic, and ethical drivers of climate policy as well as the effect of uncertainty about future growth of consumption. There is also a discussion of the optimal carbon budget and the amount of unbur...
| Main Authors: | , |
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| Format: | Working paper |
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University of Oxford
2017
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| _version_ | 1797075022028734464 |
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| author | Van der Ploeg, R Rezai, A |
| author_facet | Van der Ploeg, R Rezai, A |
| author_sort | Van der Ploeg, R |
| collection | OXFORD |
| description | A simple rule for the optimal global price of carbon is presented, which captures the geo-physical, economic, and ethical drivers of climate policy as well as the effect of uncertainty about future growth of consumption. There is also a discussion of the optimal carbon budget and the amount of unburnable carbon and stranded fossil fuel reserves and a back-on-the-envelope expression are given for calculating these. It is also shown how one can derive the end of the carbon era and peak warming. This simple arithmetic for determining climate policy is meant to complement the simulations of large-scale integrated assessment model, and to give analytical understanding of the key determinants of climate policy. The simple rules perform very well in a full integrated assessment model. It is also shown how to take account of a 2°C upper limit on global warming. Steady increases in energy efficiency do not affect the optimal price of carbon, but postpones the carbon-free era somewhat and if technical progress in renewables and economic growth are strong leads to substantially lower cumulative emissions and lower peak global warming. |
| first_indexed | 2024-03-06T23:44:30Z |
| format | Working paper |
| id | oxford-uuid:706d8ded-cba0-4f11-be64-25cd795c66f9 |
| institution | University of Oxford |
| last_indexed | 2024-03-06T23:44:30Z |
| publishDate | 2017 |
| publisher | University of Oxford |
| record_format | dspace |
| spelling | oxford-uuid:706d8ded-cba0-4f11-be64-25cd795c66f92022-03-26T19:37:08ZThe simple arithmetic of carbon pricing and stranded assetsWorking paperhttp://purl.org/coar/resource_type/c_8042uuid:706d8ded-cba0-4f11-be64-25cd795c66f9Symplectic ElementsBulk import via SwordUniversity of Oxford2017Van der Ploeg, RRezai, AA simple rule for the optimal global price of carbon is presented, which captures the geo-physical, economic, and ethical drivers of climate policy as well as the effect of uncertainty about future growth of consumption. There is also a discussion of the optimal carbon budget and the amount of unburnable carbon and stranded fossil fuel reserves and a back-on-the-envelope expression are given for calculating these. It is also shown how one can derive the end of the carbon era and peak warming. This simple arithmetic for determining climate policy is meant to complement the simulations of large-scale integrated assessment model, and to give analytical understanding of the key determinants of climate policy. The simple rules perform very well in a full integrated assessment model. It is also shown how to take account of a 2°C upper limit on global warming. Steady increases in energy efficiency do not affect the optimal price of carbon, but postpones the carbon-free era somewhat and if technical progress in renewables and economic growth are strong leads to substantially lower cumulative emissions and lower peak global warming. |
| spellingShingle | Van der Ploeg, R Rezai, A The simple arithmetic of carbon pricing and stranded assets |
| title | The simple arithmetic of carbon pricing and stranded assets |
| title_full | The simple arithmetic of carbon pricing and stranded assets |
| title_fullStr | The simple arithmetic of carbon pricing and stranded assets |
| title_full_unstemmed | The simple arithmetic of carbon pricing and stranded assets |
| title_short | The simple arithmetic of carbon pricing and stranded assets |
| title_sort | simple arithmetic of carbon pricing and stranded assets |
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