Scandinavian Working Papers in Economics
Memorandum,
Oslo University, Department of Economics
No 04/2010: Climate Change and Carbon Tax Expectations
Michael Hoel ()
Additional contact information
Michael Hoel: Dept. of Economics, University of Oslo, Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway
Abstract: If investors fear that future carbon taxes will be lower than currently announced by policy makers, long-run investments in greenhouse gas mitigation may be smaller than desirable. On the other hand, owners of a non-renewable carbon resource that underestimate future carbon taxes will postpone extraction compared with what they would have chosen had the policymakers been able to commit to the optimal tax path. If extraction costs rise rapidly as accumulated extraction rises, near-term emissions increase as a consequence of a downward bias in the expected future carbon taxes. Whether investments in greenhouse gas mitigation go up or down due to the expectation error depends on the time pro…le of the returns to the investment.
Keywords: climate change; exhaustible resources; carbon tax
24 pages, March 24, 2010
Full text files
Memo-04-2010.pdf
Questions (including download problems) about the papers in this series should be directed to Mari Strønstad Øverås ()
Report other problems with accessing this service to Sune Karlsson ().
RePEc:hhs:osloec:2010_004This page generated on 2024-09-13 22:16:45.