TY  - JOUR
A1  - Lilliestam, Johan
A1  - Patt, Anthony
A1  - Bersalli, Germán
T1  - On the quality of emission reductions
BT  - observed effects of carbon pricing on investments, innovation, and operational shifts. A response to van den Bergh and Savin (2021)
JF  - Environmental and Resource Economics
N2  - To meet the Paris Agreement targets, carbon emissions from the energy system must be eliminated by mid-century, implying vast investment and systemic change challenges ahead. In an article in WIREs Climate Change, we reviewed the empirical evidence for effects of carbon pricing systems on technological change towards full decarbonisation, finding weak or no effects. In response, van den Bergh and Savin (2021) criticised our review in an article in this journal, claiming that it is "unfair", incomplete and flawed in various ways. Here, we respond to this critique by elaborating on the conceptual roots of our argumentation based on the importance of short-term emission reductions and longer-term technological change, and by expanding the review. This verifies our original findings: existing carbon pricing schemes have sometimes reduced emissions, mainly through switching to lower-carbon fossil fuels and efficiency increases, and have triggered weak innovation increases. There is no evidence that carbon pricing systems have triggered zero-carbon investments, and scarce but consistent evidence that they have not. Our findings highlight the importance of adapting and improving climate policy assessment metrics beyond short-term emissions by also assessing the quality of emission reductions and the progress of underlying technological change.
KW  - Carbon pricing
KW  - Climate policy
KW  - Decarbonisation
KW  - Technological change
KW  - Energy transition
Y1  - 2022
U6  - https://doi.org/10.1007/s10640-022-00708-8
SN  - 0924-6460
SN  - 1573-1502
VL  - 83
IS  - 3
SP  - 733
EP  - 758
PB  - Springer
CY  - Dordrecht
ER  - 
TY  - JOUR
A1  - Kalkuhl, Matthias
A1  - Steckel, Jan Christoph
A1  - Edenhofer, Ottmar
T1  - All or nothing
BT  - climate policy when assets can become stranded
JF  - Journal of environmental economics and management
N2  - This paper develops a new perspective on stranded assets in climate policy using a partial equilibrium model of the energy sector. Political-economy related aspects are considered in the government's objective function. Lobbying power of firms or fiscal considerations by the government lead to time inconsistency: The government will deviate from a previously announced carbon tax which creates stranded assets. Under rational expectations, we show that a time-consistent policy outcome exists with either a zero carbon tax or a prohibitive carbon tax that leads to zero fossil investments - an "all-or-nothing" policy. Although stranded assets are crucial to such a bipolar outcome, they disappear again under time-consistent policy. Which of the two outcomes (all or nothing) prevails depends on the lobbying power of owners of fixed factors (land and fossil resources) but not on fiscal revenue considerations or on the lobbying power of renewable or fossil energy firms.
KW  - Climate policy
KW  - Optimal control
KW  - Political economy
KW  - Public finance
KW  - Credible policy
KW  - Time inconsistency
Y1  - 2020
U6  - https://doi.org/10.1016/j.jeem.2019.01.012
SN  - 0095-0696
SN  - 1096-0449
VL  - 100
PB  - Elsevier
CY  - San Diego
ER  - 
TY  - JOUR
A1  - Diluiso, Francesca
A1  - Annicchiarico, Barbara
A1  - Kalkuhl, Matthias
A1  - Minx, Jan Christoph
T1  - Climate actions and macro-financial stability
BT  - the role of central banks
JF  - Journal of environmental economics and management
N2  - Limiting global warming to well below 2 degrees C may pose threats to macroeconomic and financial stability. In an estimated Euro Area New Keynesian model with financial frictions and climate policy, we study the possible perils of a low-carbon transition and evaluate the role of monetary policy and financial regulation. We show that, even for very ambitious climate targets, transition costs are moderate along a timely and gradual mitigation pathway. Inflation volatility strongly increases for disorderly climate policy, demanding a strong monetary response by central banks. In reaction to an adverse financial shock originating in the fossil sector, a green quantitative easing policy can provide an effective stimulus to the economy, but its stabilizing properties do not significantly differ from those of market neutral asset purchase programs. A financial regulation, encouraging the decarbonization of the banks' balance sheets via ad hoc capital requirements, can significantly reduce the severity of a financial crisis, but prolongs the recovery phase. Our results suggest that the involvement of central banks in climate actions must be carefully designed to be in compliance with their mandate and to avoid unintended trade-offs.
KW  - Climate policy
KW  - Green transition
KW  - Monetary policy
KW  - Capital requirements
KW  - Green quantitative easing
KW  - Euro area
Y1  - 2021
U6  - https://doi.org/10.1016/j.jeem.2021.102548
SN  - 0095-0696
SN  - 1096-0449
VL  - 110
PB  - Elsevier
CY  - Amsterdam
ER  -