TY - JOUR A1 - Franks, Max A1 - Kalkuhl, Matthias A1 - Lessmann, Kai T1 - Optimal pricing for carbon dioxide removal under inter-regional leakage JF - Journal of environmental economics and management N2 - Carbon dioxide removal (CDR) moves atmospheric carbon to geological or land-based sinks. In a first-best setting, the optimal use of CDR is achieved by a removal subsidy that equals the optimal carbon tax and marginal damages. We derive second-best policy rules for CDR subsidies and carbon taxes when no global carbon price exists but a national government implements a unilateral climate policy. We find that the optimal carbon tax differs from an optimal CDR subsidy because of carbon leakage and a balance of resource trade effect. First, the optimal removal subsidy tends to be larger than the carbon tax because of lower supply-side leakage on fossil resource markets. Second, net carbon exporters exacerbate this wedge to increase producer surplus of their carbon resource producers, implying even larger removal subsidies. Third, net carbon importers may set their removal subsidy even below their carbon tax when marginal environmental damages are small, to appropriate producer surplus from carbon exporters. Y1 - 2022 U6 - https://doi.org/10.1016/j.jeem.2022.102769 SN - 1096-0449 SN - 0095-0696 VL - 117 PB - Elsevier CY - Amsterdam ER - TY - JOUR A1 - Diluiso, Francesca A1 - Walk, Paula A1 - Manych, Niccolo A1 - Cerutti, Nicola A1 - Chipiga, Vladislav A1 - Workman, Annabelle A1 - Ayas, Ceren A1 - Cui, Ryna Yiyun A1 - Cui, Diyang A1 - Song, Kaihui A1 - Banisch, Lucy A. A1 - Moretti, Nikolaj A1 - Callaghan, Max W. A1 - Clarke, Leon A1 - Creutzig, Felix A1 - Hilaire, Jerome A1 - Jotzo, Frank A1 - Kalkuhl, Matthias A1 - Lamb, William F. A1 - Löschel, Andreas A1 - Müller-Hansen, Finn A1 - Nemet, Gregory F. A1 - Oei, Pao-Yu A1 - Sovacool, Benjamin K. A1 - Steckel, Jan Christoph A1 - Thomas, Sebastian A1 - Wiseman, John A1 - Minx, Jan C. T1 - Coal transitions - part 1 BT - a systematic map and review of case study learnings from regional, national, and local coal phase-out experiences JF - Environmental research letters N2 - A rapid coal phase-out is needed to meet the goals of the Paris Agreement, but is hindered by serious challenges ranging from vested interests to the risks of social disruption. To understand how to organize a global coal phase-out, it is crucial to go beyond cost-effective climate mitigation scenarios and learn from the experience of previous coal transitions. Despite the relevance of the topic, evidence remains fragmented throughout different research fields, and not easily accessible. To address this gap, this paper provides a systematic map and comprehensive review of the literature on historical coal transitions. We use computer-assisted systematic mapping and review methods to chart and evaluate the available evidence on historical declines in coal production and consumption. We extracted a dataset of 278 case studies from 194 publications, covering coal transitions in 44 countries and ranging from the end of the 19th century until 2021. We find a relatively recent and rapidly expanding body of literature reflecting the growing importance of an early coal phase-out in scientific and political debates. Previous evidence has primarily focused on the United Kingdom, the United States, and Germany, while other countries that experienced large coal declines, like those in Eastern Europe, are strongly underrepresented. An increasing number of studies, mostly published in the last 5 years, has been focusing on China. Most of the countries successfully reducing coal dependency have undergone both demand-side and supply-side transitions. This supports the use of policy approaches targeting both demand and supply to achieve a complete coal phase-out. From a political economy perspective, our dataset highlights that most transitions are driven by rising production costs for coal, falling prices for alternative energies, or local environmental concerns, especially regarding air pollution. The main challenges for coal-dependent regions are structural change transformations, in particular for industry and labor. Rising unemployment is the most largely documented outcome in the sample. Policymakers at multiple levels are instrumental in facilitating coal transitions. They rely mainly on regulatory instruments to foster the transitions and compensation schemes or investment plans to deal with their transformative processes. Even though many models suggest that coal phase-outs are among the low-hanging fruits on the way to climate neutrality and meeting the international climate goals, our case studies analysis highlights the intricate political economy at work that needs to be addressed through well-designed and just policies. KW - climate change mitigation KW - coal transitions KW - evidence synthesis KW - political economy KW - systematic map Y1 - 2021 U6 - https://doi.org/10.1088/1748-9326/ac1b58 SN - 1748-9326 VL - 16 IS - 11 PB - Institute of Physics Publishing (IOP) CY - Bristol ER - TY - JOUR A1 - Montrone, Lorenzo A1 - Steckel, Jan Christoph A1 - Kalkuhl, Matthias T1 - The type of power capacity matters for economic development BT - evidence from a global panel JF - Resource and energy economics N2 - We examine the relationship between different types of power investments and regional economic dynamics. We construct a novel panel dataset combining data on regional GDP and power capacity additions for different technologies between 1960 and 2015, which covers 65% of the global power capacity that has been installed in this period. We use an event study design to identify the effect of power capacity addition on GDP per capita, exploiting the fact that the exact amount of power capacity coming online each year is determined by random construction delays. We find evidence that GDP per capita increases by 0.2% in the 6 years around the coming online of 100 MW coal-fired power capacity. We find similar effects for hydropower capacity, but not for any other type of power capacity. The positive effects are regionally bounded and stronger for projects on new sites (green-field). The magnitude of this effect might not be comparable to the total external costs of building new coal-fired power capacity, yet our results help to explain why policymakers favor coal investments for spurring regional growth. KW - Energy and development KW - Economic growth KW - Public infrastructure KW - Public investments KW - Electricity sector Y1 - 2022 U6 - https://doi.org/10.1016/j.reseneeco.2022.101313 SN - 0928-7655 VL - 69 PB - Elsevier CY - Amsterdam 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 - TY - JOUR A1 - Edenhofer, Ottmar A1 - Kalkuhl, Matthias A1 - Ockenfels, Axel T1 - Das Klimaschutzprogramm der Bundesregierung BT - eine Wende der deutschen Klimapolitik? JF - Perspektiven der Wirtschaftspolitik N2 - Das Klimaschutzgesetz hat einen Paradigmenwechsel eingeleitet: den Einstieg in eine CO2-Bepreisung als künftiges Leitinstrument der Klimapolitik. Auf den ersten Blick ist der CO2-Preis unter einer Fülle von Fördermaßnahmen und ordnungsrechtlichen Regelungen verschüttet, deren Wirksamkeit und Kosten höchst unsicher sind. Der CO2-Preis ist aber so angelegt, dass er langfristig das dominante Instrument einer europäisch harmonisierten Klimapolitik werden kann. Der angedeutete Paradigmenwechsel der deutschen Klimapolitik öffnet damit die Tür, die europäische und internationale Kooperation zu stärken. Dazu ist es aber notwendig, neben der europäischen auch die globale Klimapolitik neu auszurichten. Auch dort sollten sich die Verhandlungen statt auf nationale Mengenziele auf CO2-Preise konzentrieren. Die erforderliche Kooperation wird möglich, wenn die Regierungen Transferzahlungen strategisch und reziprok nutzen. So könnte die Effektivität der Klimapolitik erhöht werden und es ließen sich die entstehenden Verteilungskonflikte entschärfen. KW - Klimaschutzgesetz KW - CO2-Preis KW - Emissionshandel KW - internationale Kooperation KW - Klimawandel KW - Klimapolitik KW - Deutschland KW - EU Y1 - 2020 U6 - https://doi.org/10.1515/pwp-2020-0001 SN - 1465-6493 SN - 1468-2516 VL - 21 IS - 1 SP - 4 EP - 18 PB - De Gruyter CY - Berlin ER - TY - JOUR A1 - Kalkuhl, Matthias A1 - Wenz, Leonie T1 - The impact of climate conditions on economic production BT - evidence from a global panel of regions JF - Journal of Environmental Economics and Management N2 - We present a novel data set of subnational economic output, Gross Regional Product (GRP), for more than 1500 regions in 77 countries that allows us to empirically estimate historic climate impacts at different time scales. Employing annual panel models, long-difference regressions and cross-sectional regressions, we identify effects on productivity levels and productivity growth. We do not find evidence for permanent growth rate impacts but we find robust evidence that temperature affects productivity levels considerably. An increase in global mean surface temperature by about 3.5°C until the end of the century would reduce global output by 7–14% in 2100, with even higher damages in tropical and poor regions. Updating the DICE damage function with our estimates suggests that the social cost of carbon from temperature-induced productivity losses is on the order of 73–142$/tCO2 in 2020, rising to 92–181$/tCO2 in 2030. These numbers exclude non-market damages and damages from extreme weather events or sea-level rise. KW - climate change KW - climate damages KW - climate impacts KW - growth regression KW - global warming KW - panel regression KW - cross-sectional regression KW - damage KW - function KW - social costs of carbon Y1 - 2020 U6 - https://doi.org/10.1016/j.jeem.2020.102360 SN - 0095-0696 SN - 1096-0449 VL - 103 PB - Elsevier CY - San Diego ER - TY - JOUR A1 - Edenhofer, Ottmar A1 - Franks, Max A1 - Kalkuhl, Matthias T1 - Pigou in the 21st century BT - a tribute on the occasion of the 100th anniversary of the publication of The Economics of Welfare JF - International tax and public finance N2 - 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. KW - Environmental economics KW - Climate change economics KW - Carbon pricing KW - Pigouvian taxation KW - Economic policy Y1 - 2021 U6 - https://doi.org/10.1007/s10797-020-09653-y SN - 0927-5940 SN - 1573-6970 VL - 28 IS - 5 SP - 1090 EP - 1121 PB - Springer CY - Dordrecht ER - TY - JOUR A1 - Sureth, Michael A1 - Kalkuhl, Matthias A1 - Edenhofer, Ottmar A1 - Rockström, Johan T1 - A welfare economic approach to planetary boundaries JF - Jahrbücher für Nationalökonomie und Statistik N2 - The crises of both the climate and the biosphere are manifestations of the imbalance between human extractive, and polluting activities and the Earth’s regenerative capacity. Planetary boundaries define limits for biophysical systems and processes that regulate the stability and life support capacity of the Earth system, and thereby also define a safe operating space for humanity on Earth. Budgets associated to planetary boundaries can be understood as global commons: common pool resources that can be utilized within finite limits. Despite the analytical interpretation of planetary boundaries as global commons, the planetary boundaries framework is missing a thorough integration into economic theory. We aim to bridge the gap between welfare economic theory and planetary boundaries as derived in the natural sciences by presenting a unified theory of cost-benefit and cost-effectiveness analysis. Our pragmatic approach aims to overcome shortcomings of the practical applications of CEA and CBA to environmental problems of a planetary scale. To do so, we develop a model framework and explore decision paradigms that give guidance to setting limits on human activities. This conceptual framework is then applied to planetary boundaries. We conclude by using the realized insights to derive a research agenda that builds on the understanding of planetary boundaries as global commons. KW - cost-benefit analysis KW - cost-effectiveness analysis KW - global commons KW - planetary boundaries KW - precautionary principle KW - shadow price KW - uncertainty KW - welfare economics Y1 - 2023 U6 - https://doi.org/10.1515/jbnst-2022-0022 SN - 0021-4027 SN - 2366-049X VL - 243 IS - 5 SP - 477 EP - 542 PB - De Gruyter Oldenbourg CY - Berlin ER - TY - JOUR A1 - Edenhofer, Ottmar A1 - Kalkuhl, Matthias A1 - Requate, Tilman A1 - Steckel, Jan Christoph T1 - How assets get stranded BT - the impact of climate policy on capital and fossil fuel owners : introduction to the JEEM special section on climate policy and political economy JF - Journal of environmental economics and management N2 - Internalizing external costs of carbon is a fundamental goal of climate policy. Since the seminal work of Arthur Pigou in 1920, economic theory has analyzed the efficiency gains arising from various instruments that internalize externalities and lead to Pareto-improvements. It is widely recognized in environmental economics that a carbon price would effectively reflect the scarcity of the atmospheric disposal space for carbon depending on the temperature target that is to be achieved. The question of how to organize the transition process, i.e. moving from inefficient to efficient allocations, and implementing the necessary policies, has gained increasing attention in recent years. Arguably, the transition process is tightly interwoven with political processes that include complex interactions between societal stakeholders, such as households and firms, on the one hand, and political decision makers, on the other. Accordingly, understanding political-economy aspects of the transition process, including distributional outcomes, is becoming increasingly relevant. While a growing literature discusses the distributional implications of climate policy on households, it is less well understood how asset owners might be affected by climate policy and how these potential impacts would interact with the transition process. This Special Section focuses on public policy challenges related to this transition problem, with special emphasis on asset owners. A core theme is the special role of stranded assets, i.e. a devaluation of capital stocks or financial assets either by introducing a stringent carbon price or by omitting a pre-announced policy of this kind. Y1 - 2020 U6 - https://doi.org/10.1016/j.jeem.2020.102300 SN - 0095-0696 SN - 1096-0449 VL - 100 PB - Elsevier CY - Amsterdam ER - TY - JOUR A1 - Baldenius, Till A1 - Bernstein, Tobias A1 - Kalkuhl, Matthias A1 - von Kleist-Retzow, Maximilian A1 - Koch, Nicolas T1 - Ordnungsrecht oder Preisinstrumente? BT - zur Verteilungswirkung von Klimaschutzmaßnahmen im Verkehr JF - Ifo-Schnelldienst Y1 - 2021 UR - https://www.ifo.de/DocDL/sd-2021-06-loeschel-etal-klimapolitik-verteilungswirkungen.pdf#page=4 SN - 0018-974X SN - 2700-8371 SN - 2199-4455 VL - 74 IS - 6 SP - 6 EP - 10 PB - Institut für Wirtschaftsforschung CY - München ER -