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Fossil extraction bans and carbon taxes: Assessing their interplay through multiple models
Pietro Andreoni1,2, Lara Aleluia Reis1, Laurent Drouet1
1RFF-CMCC European Institute for the Economics and the Environment, Centro Euro-Mediterraneo sui Cambiamenti Climatici, Milan, Italy.
Iscience
|April 10, 2023
Summary
Combining fossil fuel bans with carbon pricing can lower required carbon prices and boost renewable energy investment. These supply and demand policies are crucial for ambitious climate targets.
Area of Science:
- Climate Science
- Environmental Policy
- Energy Economics
Background:
- Current climate policies face scrutiny regarding ambition and effectiveness.
- Integrating demand-side (carbon pricing) and supply-side (fossil fuel bans) policies is proposed but poorly understood.
- Understanding policy interplay is vital for effective climate stabilization strategies.
Purpose of the Study:
- To quantify the effectiveness of supply-side fossil fuel bans.
- To assess the interaction between supply-side bans and demand-side policies (carbon pricing).
- To evaluate their combined impact on climate stabilization.
Main Methods:
- Multi-model assessment using four integrated assessment models.
- Exploration of various fossil fuel ban scenarios.
- Analysis of policy interactions on emissions, carbon prices, and energy investments.
Main Results:
- International supply-side policies reduce carbon emissions but are insufficient alone for the 2°C target.
- Combined supply and demand policies reduce the necessary carbon price.
- Combined policies decrease reliance on carbon dioxide removal technologies and increase renewable energy investment.
Conclusions:
- Fossil fuel bans, when combined with price-based policies, offer a viable strategy for achieving ambitious climate mitigation goals.
- Integrating supply-side bans alongside demand-side policies enhances the effectiveness of climate stabilization strategies.
- Policy integration is key to navigating pathways toward significant emissions reductions and temperature stabilization.
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