The Impact of Carbon Taxes on the Value of Fossil-Fuel Reserves and the Efficiency of Climate Policy

William Nordhaus ()
Additional contact information
William Nordhaus: Cowles Foundation, Yale University, https://cowles.yale.edu/people/william-nordhaus

No 2344, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: The present study analyzes the impact of carbon pricing along with other policies on the value of fossil fuel resources, CO2 emissions, and economic welfare. It employs a model based on the Hotelling analysis of resource values and calibrates this approach to data on fossil resources, costs, demands, and CO2 emissions. Total fossil-fuel resource rents are estimated to be $17 trillion (2021 US$) without carbon pricing. Oil and gas rents are unchanged for low carbon taxes but would decline by 40% with a $100/tCO2 price. The losses in producer values would be only about 10% of the carbon tax revenues. The study also shows that other policies Ð such as ones involving ethical investing or subsidies for renewable energy Ð are very inefficient and poor substitutes for carbon pricing.

Pages: 67 pages
Date: 2022-08
New Economics Papers: this item is included in nep-ene and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://cowles.yale.edu/sites/default/files/2022-11/d2345.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cwl:cwldpp:2345

Ordering information: This working paper can be ordered from
Cowles Foundation, Yale University, Box 208281, New Haven, CT 06520-8281 USA
The price is None.

Access Statistics for this paper

More papers in Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University Yale University, Box 208281, New Haven, CT 06520-8281 USA. Contact information at EDIRC.
Bibliographic data for series maintained by Brittany Ladd ().