Theoretical principals of unilateral climate policy

• Applicants: Professor Dr. Thomas Eichner; Professor Dr. Rüdiger Pethig
• Subject Area: Economic Policy, Applied Economics
• Term: from 2012 to 2019
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 213612708

Due to the poor progress of climate negotiations in recent years, it is more likely that a sub-global climate coalition will form than a global, all encompassing climate agreement. Therefore the analysis and improved understanding of the effectiveness and limits of unilateral climate policies is still an important task of theoretical research. The research proposal whose funding is applied for aims at continuing and extending the project Theoretical foundations of unilateral climate policy that the applicants work on since the end of January 2013 until the end of January 2016 and that is being funded by the DFG. To some extent, the continuation proposal takes up parts of the current project that the applicants will not be able to deal with until the end of January 2016, because the work on other parts of the first project turned out to be more intensive than planned. However, the continuation proposal also takes up some new core topics, especially the analysis of supply-side climate policies (carbon tax, carbon trading system, deposit policy) as well as combined supply-side and demand-side policies that turned much more timely in practice and science since the first research proposal was written in early 2012.The continuation project suggests making predominant use of general equilibrium models for investigating the contribution the policies referred to above can make to avoid serious climate damages, especially to avoid violating the widely accepted political goal of limiting the rise of world temperature (2-degree goal). Accounting for the inter-temporal dimension of limate change, in-depth analyses of unilateral regulation will be carried with stand-alone supply-side instruments, with different combinations of demand-side and supply-side instruments and with emissions taxes and capital taxes.

• DFG Programme: Research Grants