Franks et al. (2022): Optimal Pricing for Carbon Dioxide Removal Under Inter-Regional Leakage
Max Franks, Matthias Kalkuhl, Kai Lessmann IN: CEPA Discussion Papers 43, Center for Economic Policy Analysis. DOI: 10.25932/publishup-53808
The authors derive second-best subsidies for CDR when no global carbon price exists but a national government implements a unilateral climate policy. They find that the optimal carbon tax differs from an optimal CDR subsidy because of carbon leakage, terms-of-trade and fossil resource rent dynamics.