Quotation van der Ploeg, Frederick, Rezai, Armon. 2018. The Simple Arithmetic of Carbon Pricing and Stranded Assets. Energy Efficiency, 11, 627-639.


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Abstract

A simple rule for the optimal global price of carbon is presented, which captures the geophysical, economic, and ethical drivers of climate policy as well as the effect of uncertainty about future growth of consumption. There is also a discussion of the optimal carbon budget and the amount of unburnable carbon and stranded fossil fuel reserves and a back-on-the-envelope expression are given for calculating these. It is also shown how one can derive the end of the carbon era and peak warming. This simple arithmetic for determining climate policy is meant to complement the simulations of large-scale integrated assessment model, and to give analytical understanding of the key determinants of climate policy. The simple rules perform very well in a full integrated assessment model. It is also shown how to take account of a 2 °C upper limit on global warming. Steady increases in energy efficiency do not affect the optimal price of carbon, but postpone the carbon-free era somewhat and if technical progress in renewables and economic growth are strong leads to substantially lower cumulative emissions and lower peak global warming.

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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Journal article
Journal Energy Efficiency
Citation Index SSCI
Language English
Title The Simple Arithmetic of Carbon Pricing and Stranded Assets
Volume 11
Year 2018
Page from 627
Page to 639
Reviewed? Y
DOI http://dx.doi.org/10.1007/s12053-017-9592-6
Open Access Y

Associations

People
Rezai, Armon (Details)
External
van der Ploeg, Frederick (University of Oxford, United Kingdom)
Organization
Institute for Ecological Economics IN (Details)
Research areas (ÖSTAT Classification 'Statistik Austria')
2928 Environmental economics (Details)
5325 Political economics (Details)
5334 Political economic policy (Details)
5335 Political economic theory (Details)
5341 Economic policy (Details)
5353 Environmental economics (Details)
5924 Environmental economics (Details)
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