The fiscal implications of stringent climate policy

Richard Tol

Economic Analysis and Policy, 2023, vol. 80, issue C, 495-504

Abstract: Stringent climate policy compatible with the targets of the 2015 Paris Agreement would pose a substantial fiscal challenge. Reducing carbon dioxide emissions by 95% or more by 2050 would raise 7% (1%–17%) of GDP in carbon tax revenue, half of current, global tax revenue. Revenues are relatively larger in poorer regions. Subsidies for carbon dioxide sequestration would amount to 6.6% (0.3–7.1%) of GDP. These numbers are conservative as they were estimated using models that assume first-best climate policy implementation and ignore the costs of raising revenue. The fiscal challenge rapidly shrinks if emission targets are relaxed.

Keywords: Climate policy (search for similar items in EconPapers)
JEL-codes: H20 Q54 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (2)

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Working Paper: The fiscal implications of stringent climate policy (2023)
Working Paper: The fiscal implications of stringent climate policy (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:80:y:2023:i:c:p:495-504

DOI: 10.1016/j.eap.2023.09.004

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