A Short Guide To A Secure Future

by Stephen Stretton


Part Three introduces the economics of scarcity and taxation. I introduce the idea of a carbon price and investigate the best choice of instrument for achieving reductions in greenhouse gas emissions.
Presentation - Pricing Carbon and Taxing Energy (pdf)

The Economics of Limitations - Climate Change and 'Peak Oil'

I investigate the economics of limitations, making clear the differences between constraints in availability of resources and those to do with environmental limits (which we can cross, but at a social cost).
Chapter 8a - The Economics of Constraints - Climate Change and 'Peak Oil' (pdf)

Political Theory and Carbon Pricing

Policies and strategies to reduce carbon emissions, such as a carbon price, are evaluated in a wider context of political norms and philosophy.
Chapter 8b - Philosophical Perspectives on Carbon Pricing (pdf)

Integrating Externalities and Taxation: A Diagramatic, Economic Analysis

This document describes in diagrammatic form the basic dual economic justification for a carbon price, a) correcting for externalities and b) raising revenue; and c) the two effects together. I consider the use of a carbon tax in the context of optimal taxation theory and in relation to the revenues raised. Carbon taxes should be higher than the social cost of carbon, up to the point of maximum revenue raising, and lower beyond this point. Overall, economic costs may be reduced by increasing pollution taxes and displacing less efficient taxes.
Chapter 8c - Integrating Externalities and Taxation - A Diagramatic Economic Analysis (pdf)

Carbon Pricing: Instrument Choice

Raising the end-user price, or otherwise rationing fossil fuels is a necessary condition for reducing greenhouse gas emissions emissions. This paper will focus on the appropriate mechanism for pricing carbon. Different options will be assessed according to certain criteria. There are four major aspects of instrument design which are assessed: whether a carbon price should be imposed 'upstream' or 'downstream', what the coverage of such a scheme should be, how revenues should be used, and lastly whether policy should primarily deal with quantity of emissions or price (carbon taxes). I provide tentative conclusions to all these questions. Two commonly suggested market-based mechanisms for reducing greenhouse gas emissions are a carbon tax and a cap-and-trade scheme. I argue that there are some arguments for preferring a carbon tax over a cap-and-trade scheme, and that the two policies are not mutually exclusive.
Chapter 9 - Carbon Pricing: Instrument Choice (pdf)