Our paper is officially out in The Review of Economic Studies with Jørgen Juel Andersen, Jonas Hveding Hamang and Torfinn Harding
Most climate policies target fossil fuel consumption. We use global firm- and field-level data to ask what happens when policies are levied on oil production instead./1
We start from the observation that policies limiting oil production are widespread, as many countries already use production taxes for fiscal purposes.
These taxes create indirect carbon price of $32/tCO2, larger than actual climate (globally averaging at only $3/tCO2). /2
Lassi Ahlvik
Uusi taloustiedettä, ekologiaa ja tilastotiedettä yhdistävä hanke alkaa.
Suuri kiitos Jane ja Aatos Erkon säätiölle rahoituksesta, ja odotan innolla yhteistyötä @annaliisalaine.bsky.social ja muiden kanssa🙏
Lassi Ahlvik
Lassi Ahlvik
Please see the full paper for more results, details and modelling assumptions: academic.oup.com/restud/advan...
If only OECD countries adopt the climate royalty surcharge, there is carbon leakage as the price increase triggers more production in other countries. This leakage amounts to 47-73% of the intended effect. /5
Existing production taxes act as an indirect climate policy: if all taxes were reduced by 1pp, the cumulative emissions would increase by 3.2–6.8 GtCO2 by 2100.
If all countries adopt a 20 percentage point "climate royalty surcharge" the emissions would drop by 85-161 GtCO2 /4
