Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/198798 
Year of Publication: 
2018
Series/Report no.: 
CESifo Working Paper No. 7438
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
Germany aims to phase out coal to achieve its 2030 climate target, for which a UK-style carbon price floor is considered. But this measure comes with risks related to the uncertainty about what price level is sufficient, and the waterbed effect arising from unilateral policy under the EU-ETS. Quantifying these risks we find that to be on the “safe side” target-wise, the price must be nearly twice as high as the reference scenario price (33 €/tCO2). Further, cancelling 1.1 GtCO2 of certificates and forming coalitions with other countries is essential to reduce the risk that EU climate policy will renationalize.
Subjects: 
EU-ETS
carbon price floor
coal phase-out
policy interaction
waterbed effect
JEL: 
L94
Q58
Document Type: 
Working Paper
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