Working Paper: NBER ID: w26086
Authors: Geoffrey Heal; Wolfram Schlenker
Abstract: We use field-level cost estimates of all oil and natural gas fields to highlight dynamic aspects of a global carbon tax. Some of the initial reduction in consumption will be offset through higher consumption later on. Only high-cost reserves will be priced out of the market, e.g., at 200 dollars per ton of CO₂ cumulative emissions decrease by 4%. The tax incidence initially falls on consumers under a constant tax but eventually becomes negative as the lifetime of the resources is extended. An increasing tax over time reduces the initial incidence on consumers.
Keywords: No keywords provided
JEL Codes: Q41; Q54
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| carbon tax (H23) | CO2 emissions (L94) |
| carbon tax (H23) | fossil fuel consumption (Q35) |
| carbon tax (H23) | incidence on consumers (F61) |
| carbon tax (H23) | future emissions (Q47) |
| high-cost reserves priced out (Q31) | cumulative use (C80) |
| increasing carbon tax (Q58) | incentive to extend consumption period (D15) |
| carbon tax (H23) | revenue generation (H27) |