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Mitigation costs, distributional effects, and ancillary benefits of carbon policies in the Nordic countries, the U.K., and Ireland

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Abstract

This paper provides a survey of top-downmodelling analyses of carbon (C) abatementmitigation costs, distributional effectsand ancillary benefits in the Nordiccountries, the U.K. and Ireland. Specialemphasis is placed on the effects ofrevenue recycling and tax exemptions.According to the analyses, modestemissions reductions can be met withoutsubstantial costs for the countriesstudied, and a strong double dividend isfound in some analyses. The gross domesticproduct (GDP) or welfare effects are mostlyin the range of –0.4 and 1.2 percent whenC emissions are reduced by 20–30 per cent.Lowest costs are obtained without taxexemptions and with tax revenues used toreduce distortionary taxes. Ancillarybenefits are mostly in the range35–80/MgC-1, i.e., about the same order ofmagnitude as the mitigation costs.Distributional effects are mostlyregressive, unless the tax revenues aredistributed in lump-sum fashion with equaltransfers to each household.

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Authors and Affiliations

  1. Statistics Norway, P.O. Box 8131 Dep., 0033, Oslo, Norway

    Brita Bye & Knut Einar Rosendahl

  2. Ragnar Frisch Centre for Economic Research, Gaustadalléen 21, 0349, Oslo, Norway

    Snorre Kverndokk

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  1. Brita Bye
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Bye, B., Kverndokk, S. & Rosendahl, K.E. Mitigation costs, distributional effects, and ancillary benefits of carbon policies in the Nordic countries, the U.K., and Ireland. Mitigation and Adaptation Strategies for Global Change 7, 339–366 (2002). https://doi.org/10.1023/A:1024741018194

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