Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/234225 
Year of Publication: 
2021
Series/Report no.: 
Kiel Working Paper No. 2183
Publisher: 
Kiel Institute for the World Economy (IfW), Kiel
Abstract: 
This article summarizes insights of the 36th Energy Modeling Forum study (EMF36) on the magnitude and distribution of economic adjustment costs to greenhouse gas emission reduction targets. Under the Paris Agreement countries voluntarily committed themselves to emission reductions - so-called Nationally Determined Contributions (NDCs) - in order to combat global warming. The study suggests that tightening of NDCs in line with the commonly agreed 2 degrees temperature target will induce global economic costs of roughly 1% in 2030 - yet, these costs are unevenly spread across regions with fossil fuel exporting countries being most adversely affected from the transition towards a low-carbon economy. In order to reduce adjustment costs at the global and regional level, comprehensive emissions trading which exploits leastcost abatement options is strongly desirable as it can relax contentious normative debates on equitable burden sharing. Lump-sum recycling of revenues from emissions pricing in equal amounts to every household appeals as an attractive strategy to mitigate regressive effects and thereby make stringent climate policy more acceptable on societal fairness grounds.
Subjects: 
Paris Agreement
emissions pricing and trading
revenue recycling
JEL: 
D58
H23
Q54
Q58
Document Type: 
Working Paper

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