Franks et al. (2023): Optimal pricing for carbon dioxide removal under inter-regional leakage

Max Franks, Matthias Kalkuhl, Kai Lessmann IN: Journal of Environmental Economics and Management 117, 102769,

In a first-best setting, the optimal use of CDR is achieved by a removal subsidy that equals the optimal carbon tax and marginal damages. The authors derive second-best policy rules for CDR subsidies and carbon taxes when no global carbon price exists but a national government implements a unilateral climate policy.