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GTAP Resource #6832

"Differentiated Carbon Pricing to 2050: Insights from KPMG-IAM"
by Cretegny, Laurent, Jan Schneider, Alvaro Calzadilla and Dileep Birur

Climate change is a major source of structural breaks and uncertainty affecting businesses around the world. The economic literature suggests that the principal policy instrument to curb emissions and limit earth’s average temperature increase relative to preindustrial levels below 2°C should be carbon pricing. In addition, few economic studies have analysed the impacts of worldwide net-zero emissions by mid-century. This paper introduces KPMG-IAM, a GTAP-MAGICC-based integrated assessment model, and examines the economic impacts of achieving net-zero emissions by 2050 through either a uniform or differentiated carbon price.

At the global level the size of the carbon tax under both carbon pricing specifications are quite similar, they reach around $510 and $600 in 2050, for the 2°C and 1.5°C scenarios, respectively. At the regional level and under the differentiated carbon price mechanism, the carbon tax trajectory of the different regions is shaped by the countries’ initial NDC commitments to 2030, which leads to a wider regional difference in carbon tax in 2030, but then we observe a regional convergence in carbon taxes to the above values.

Resource Details (Export Citation) GTAP Keywords
Category: Other CGE Application
Status: Not published
Date: 2023
Created: Cretegny, L. (4/11/2023)
Updated: Batta, G. (6/15/2023)
Visits: 387
- Baseline development
- Model extension/development
- Climate change policy
- Climate impacts

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