Climate agreements: Optimal taxation of fossil fuels and the distribution of costs and benefits across countries

摘要

This report analyses the response of governments to a climate agreement that commits them to reduce their CO(sub 2) emissions. It develops a formula for optimal taxation of fossil fuels in open economies subject both to an emission constraint and a public budget constraint. The theory captures how national governments' behaviours are sensitive to the size of the benefits from revenue recycling and how these benefits adjust the distribution of abatement costs. The empirical part of the report illustrates the significance of the participating countries' current and potential fossil fuel taxation schemes and their roles in the fossil fuel markets. 23 refs., 11 figs., 2 tabs.