@article{StreflerKrieglerBaueretal.2021,
  author    = {Strefler, Jessica and Kriegler, Elmar and Bauer, Nico and Luderer, Gunnar and Pietzcker, Robert C. and Giannousakis, Anastasis and Edenhofer, Ottmar},
  title     = {Alternative carbon price trajectories can avoid excessive carbon removal},
  series = {Nature communications},
  volume    = {12},
  journal   = {Nature communications},
  number    = {1},
  publisher = {Nature Publishing Group},
  address   = {London},
  issn      = {2041-1723},
  doi       = {10.1038/s41467-021-22211-2},
  pages     = {8},
  year      = {2021},
  abstract  = {The large majority of climate change mitigation scenarios that hold warming below 2 °C show high deployment of carbon dioxide removal (CDR), resulting in a peak-and-decline behavior in global temperature. This is driven by the assumption of an exponentially increasing carbon price trajectory which is perceived to be economically optimal for meeting a carbon budget. However, this optimality relies on the assumption that a finite carbon budget associated with a temperature target is filled up steadily over time. The availability of net carbon removals invalidates this assumption and therefore a different carbon price trajectory should be chosen. We show how the optimal carbon price path for remaining well below 2 °C limits CDR demand and analyze requirements for constructing alternatives, which may be easier to implement in reality. We show that warming can be held at well below 2 °C at much lower long-term economic effort and lower CDR deployment and therefore lower risks if carbon prices are high enough in the beginning to ensure target compliance, but increase at a lower rate after carbon neutrality has been reached.},
  language  = {en}
}
@article{SchultesPiontekSoergeletal.2021,
  author    = {Schultes, Anselm and Piontek, Franziska and Soergel, Bjoern and Rogelj, Joeri and Baumstark, Lavinia and Kriegler, Elmar and Edenhofer, Ottmar and Luderer, Gunnar},
  title     = {Economic damages from on-going climate change imply deeper near-term emission cuts},
  series = {Environmental research letters},
  volume    = {16},
  journal   = {Environmental research letters},
  number    = {10},
  publisher = {IOP Publishing},
  address   = {Bristol},
  issn      = {1748-9326},
  doi       = {10.1088/1748-9326/ac27ce},
  pages     = {11},
  year      = {2021},
  abstract  = {Pathways toward limiting global warming to well below 2 ∘C, as used by the IPCC in the Fifth Assessment Report, do not consider the climate impacts already occurring below 2 ∘C. Here we show that accounting for such damages significantly increases the near-term ambition of transformation pathways. We use econometric estimates of climate damages on GDP growth and explicitly model the uncertainty in the persistence time of damages. The Integrated Assessment Model we use includes the climate system and mitigation technology detail required to derive near-term policies. We find an optimal carbon price of \$115 per tonne of CO2 in 2030. The long-term persistence of damages, while highly uncertain, is a main driver of the near-term carbon price. Accounting for damages on economic growth increases the gap between the currently pledged nationally determined contributions and the welfare-optimal 2030 emissions by two thirds, compared to pathways considering the 2 ∘C limit only.},
  language  = {en}
}
@techreport{HaenselFranksKalkuhletal.2021,
  type      = {Working Paper},
  author    = {H{\"a}nsel, Martin C. and Franks, Max and Kalkuhl, Matthias and Edenhofer, Ottmar},
  title     = {Optimal carbon taxation and horizontal equity},
  series = {CEPA Discussion Papers},
  journal   = {CEPA Discussion Papers},
  number    = {28},
  issn      = {2628-653X},
  doi       = {10.25932/publishup-49812},
  url       = {http://nbn-resolving.de/urn:nbn:de:kobv:517-opus4-498128},
  pages     = {51},
  year      = {2021},
  abstract  = {We develop a model of optimal carbon taxation and redistribution taking into account horizontal equity concerns by considering heterogeneous energy efficiencies. By deriving first- and second-best rules for policy instruments including carbon taxes, transfers and energy subsidies, we then investigate analytically how horizontal equity is considered in the social welfare maximizing tax structure. We calibrate the model to German household data and a 30 percent emission reduction goal. Our results show that energy-intensive households should receive more redistributive resources than energy-efficient households if and only if social inequality aversion is sufficiently high. We further find that redistribution of carbon tax revenue via household-specific transfers is the first-best policy. Equal per-capita transfers do not suffer from informational problems, but increase mitigation costs by around 15 percent compared to the first- best for unity inequality aversion. Adding renewable energy subsidies or non-linear energy subsidies, reduces mitigation costs further without relying on observability of households' energy efficiency.},
  language  = {en}
}
@article{EdenhoferKalkuhlRoolfs2021,
  author    = {Edenhofer, Ottmar and Kalkuhl, Matthias and Roolfs, Christina},
  title     = {Carbon pricing and revenue recycling},
  series = {CESifo forum},
  volume    = {22},
  journal   = {CESifo forum},
  number    = {5},
  publisher = {Ifo},
  address   = {Munich},
  issn      = {2190-717X},
  pages     = {10 -- 14},
  year      = {2021},
  language  = {en}
}
@article{EdenhoferFranksKalkuhl2021,
  author    = {Edenhofer, Ottmar and Franks, Max and Kalkuhl, Matthias},
  title     = {Pigou in the 21st century},
  series = {International tax and public finance},
  volume    = {28},
  journal   = {International tax and public finance},
  number    = {5},
  publisher = {Springer},
  address   = {Dordrecht},
  issn      = {0927-5940},
  doi       = {10.1007/s10797-020-09653-y},
  pages     = {1090 -- 1121},
  year      = {2021},
  abstract  = {The year 2020 marks the centennial of the publication of Arthur Cecil Pigou's magnum opus The Economics of Welfare. Pigou's pricing principles have had an enduring influence on the academic debate, with a widespread consensus having emerged among economists that Pigouvian taxes or subsidies are theoretically desirable, but politically infeasible. In this article, we revisit Pigou's contribution and argue that this consensus is somewhat spurious, particularly in two ways: (1) Economists are too quick to ignore the theoretical problems and subtleties that Pigouvian pricing still faces; (2) The wholesale skepticism concerning the political viability of Pigouvian pricing is at odds with its recent practical achievements. These two points are made by, first, outlining the theoretical and political challenges that include uncertainty about the social cost of carbon, the unclear relationship between the cost-benefit and cost-effectiveness approaches, distributional concerns, fragmented ministerial responsibilities, an unstable tax base, commitment problems, lack of acceptance and trust between government and citizens as well as incomplete international cooperation. Secondly, we discuss the recent political success of Pigouvian pricing, as evidenced by the German government's 2019 climate policy reform and the EU's Green Deal. We conclude by presenting a research agenda for addressing the remaining barriers that need to be overcome to make Pigouvian pricing a common political practice.},
  language  = {en}
}