Environment

David Klenert, Cameron Hepburn, 31 July 2018

Political acceptability is the biggest challenge to implementing ambitious carbon pricing schemes. This column argues that behavioural economics and political science provide new insights into the acceptability of carbon pricing which suggest that successful reforms are more likely when the revenues are recycled through lump-sum dividends to citizens. There is no ‘one size fits all’ solution, however, and revenue recycling strategies should account for different social and political contexts and will most likely be mixed in real-world carbon pricing schemes.

David Newbery, 20 July 2018

The cost of supporting the production of renewable energy seems eye-watering. This column argues, however, that the alternative of a future energy system lacking the benefits of low-cost zero-carbon technologies is even more costly. While most renewable technologies are not yet competitive on cost with mature carbon-intensive technologies, support for renewables can be justified by learning spillovers.

Emilia Simeonova, Janet Currie, J Peter Nilsson, Reed Walker, 08 July 2018

Traffic congestion is a major problem for urban centres. Among various negative externalities, traffic creates substantial pollution which can impact the health of residents. This column explores how the implementation of a congestion pricing zone affected the health of children in Stockholm. The programme saw short-term reductions in common traffic pollutants and an accompanying decrease in children’s hospital visits for acute asthma. This decrease grew larger the longer the tax was in place. 

Manthos Delis, Kathrin de Greiff, Steven Ongena, 27 May 2018

Neglecting the possibility that fossil fuel reserves can become ‘stranded’ could result in a ‘carbon bubble’ as fossil fuel firms become overvalued. This column studies whether banks price the climate policy risk of fossil fuel firms. Prior to 2015, banks did not appear to price climate policy risk. After 2015, however, the risk is priced to a certain extent, especially for firms holding more fossil fuel reserves.

Adrien Vogt-Schilb, Guy Meunier, Stéphane Hallegatte, 29 March 2018

Traditional climate economics models recommend capturing the cheapest opportunities to reduce emissions first and keeping the most difficult options for later. This column argues that when the fact that reducing emissions takes time and requires investments in long-lived goods and assets is taken into account, the most cost efficient strategy overall is to act immediately in the sectors that are the most expensive and difficult to decarbonise, even if this means investing in options that have a higher cost right now than available alternatives. Actions on urban planning and urban transport systems are especially urgent.

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