Stabilizing CO 2 emissions Are carbon taxes a viable option?

Abstract

The paper provides an empirical analysis of the effect on international energy markets of policy measures to curb the emissions of carbon dioxide (CO 2). Model calculations indicate that if CO 2 emissions are to be stabilized by means of a carbon tax, very high tax levels are required. The concept of cost-effectiveness in designing agglobal climate convention is discussed. Due to the huge differences in pre-tax energy prices, it is argued that a uniform CO 2 tax is not necessarily cost-effective. The differences in price levels also have important implications for the effects of a CO 2 tax on the markets for the various fuels.