@techreport{BlanzEydamHeinemannetal.2022,
  type      = {Working Paper},
  author    = {Blanz, Alkis and Eydam, Ulrich and Heinemann, Maik and Kalkuhl, Matthias},
  title     = {Optimal carbon pricing with fluctuating energy prices — emission targeting vs. price targeting},
  series = {CEPA Discussion Papers},
  journal   = {CEPA Discussion Papers},
  number    = {51},
  issn      = {2628-653X},
  doi       = {10.25932/publishup-56104},
  url       = {http://nbn-resolving.de/urn:nbn:de:kobv:517-opus4-561049},
  pages     = {12},
  year      = {2022},
  abstract  = {Prices of primary energy commodities display marked fluctuations over time. Market-based climate policy instruments (e.g., emissions pricing) create incentives to reduce energy consumption by increasing the user cost of fossil energy. This raises the question of whether climate policy should respond to fluctuations in fossil energy prices? We study this question within an environmental dynamic stochastic general equilibrium (E-DSGE) model calibrated on the German economy. Our results indicate that the welfare implications of dynamic emissions pricing crucially depend on how the revenues are used. When revenues are fully absorbed, a reduction in emissions prices stabilizes the economy in response to energy price shocks. However, when revenues are at least partially recycled, a stable emissions price improves overall welfare. This result is robust to different modeling assumptions.},
  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}
}