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  The fiscal benefits of stringent climate change mitigation: an overview

Siegmeier, J., Mattauch, L., Franks, R. M., Klenert, D., Schultes, A., Edenhofer, O. (2018): The fiscal benefits of stringent climate change mitigation: an overview. - Climate Policy, 18, 3, 352-367.
https://doi.org/10.1080/14693062.2017.1400943

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Siegmeier, J.1, Author
Mattauch, L.1, Author
Franks, R. Maximilian2, Author              
Klenert, David2, Author              
Schultes, Anselm2, Author              
Edenhofer, Ottmar2, Author              
Affiliations:
1External Organizations, ou_persistent22              
2Potsdam Institute for Climate Impact Research, ou_persistent13              

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 Abstract: The Paris Agreement’s very ambitious mitigation goals, notably to ‘pursue efforts’ to limit warming to 1.5°C, imply that climate policy will remain a national affair for some time. One key obstacle to very ambitious national mitigation is that some policy makers perceive this to be in competition with major goals of fiscal policy, such as public investment or debt reduction. However, climate policy may actually contribute to these other objectives. Importantly, many fiscal implications of substantial carbon prices, which are essential for stringent mitigation targets such as the 1.5°C goal, have long been neglected by economic analyses of climate change mitigation. We systematically review recent contributions on interactions between climate policy and public finance, which include many topics beyond the classic `double dividend’ of environmental tax swaps. We can thus identify new conclusions about climate policy designs that may overcome fiscal objections and research gaps. We find that national climate policy often aligns with other objectives, provided that climate policies and fiscal policies are integrated well. A first class of interactions concerns public revenue-raising: carbon pricing can replace distortionary taxes and alleviate international tax competition; climate policy also changes asset values, which impacts the base of non-climate taxes and boosts productive investment. Second, they concern public spending, which needs to be restructured as a part of climate policy, while carbon pricing revenues may be recycled for public investment. Third, distributional impacts of climate policies include changes to household expenditures, to asset values and to employment; balancing them often requires fiscal policies. Our findings underline that jointly considering climate policy and fiscal policy can help to make substantial mitigation politically feasible.

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 Dates: 2018
 Publication Status: Finally published
 Pages: -
 Publishing info: -
 Table of Contents: -
 Rev. Type: Peer
 Identifiers: DOI: 10.1080/14693062.2017.1400943
PIKDOMAIN: Sustainable Solutions - Research Domain III
eDoc: 7790
Research topic keyword: Carbon Pricing
Research topic keyword: Climate Policy
Research topic keyword: Economics
Research topic keyword: Inequality and Equity
Organisational keyword: FutureLab - Public Economics and Climate Finance
Organisational keyword: Director Edenhofer
Organisational keyword: RD3 - Transformation Pathways
 Degree: -

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Title: Climate Policy
Source Genre: Journal, SCI, Scopus
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Publ. Info: -
Pages: - Volume / Issue: 18 (3) Sequence Number: - Start / End Page: 352 - 367 Identifier: Other: Taylor & Francis
Other: 1752-7457
ISSN: 1469-3062
CoNE: https://publications.pik-potsdam.de/cone/journals/resource/climate-policy