Can geological carbon storage be competitive?

In this paper we review the literature on the costs and benefits of geological carbon storage and the estimates of greenhouse gas permit prices under the Kyoto Protocol commitment period and beyond. Combining these results for a set of circumstances, we find that in the near-term Carbon Capture and Storage (CCS) is likely to be an economically viable option only in a small set of circumstances, particularly enhanced oil recovery. In the medium and longer term, with improvements in CCS technology and the likelihood of increased greenhouse gas permit prices, CCS is likely to become an economically viable option under a wider range of circumstances

Pigouvian tax aversion and inequity aversion in the lab

We use an experimental market with externalities to test whether inequality aversion could help explain the popularity of earmarking tax revenues. We find that voter opposition is not fully explained by material self-interest: Results indicate that preferences for fairness influence voting behavior, with greater inequality in tax revenue distribution negatively affecting the acceptability of the tax. In addition to this, we also discover a significant degree of tax-aversion in the votes. Our findings provide greater understanding of the behavioral underpinnings of the positive impact that earmarking has on the acceptability of Pigouvian taxes.Pigouvian taxes, public acceptability, earmarking, fairness, inequity aversion, laboratory experiments

The Price of Non-compliance with the Kyoto Protocol: The Remarkable Case of Norway

To induce compliance, an international enforcement mechanism needs to authorize the use of punitive consequences against a non-compliant country. However, it is reasonable to require that such consequences do not cause considerable damage to other countries as well. The compliance mechanism of the Kyoto Protocol does not meet this requirement. The Marrakesh Accords instruct the Enforcement Branch of the Compliance Committee to impose punitive consequences on a country that fails to fulfill its commitments. These consequences will not only be costly to the non-compliant country. They will have considerable adverse welfare effects for compliant countries too. Using a numerical model, we show that in the case of Norway, the welfare effects can actually be worse if another country (such as Canada, Japan or Russia) is punished than if Norway itself is punished. Similar effects will also be experienced by other buyers of emission permits. But Norway suffers more than other buyers because it is also a major exporter of fossil fuels

Combining insights from economics and social psychology to explain environmentally significant consumption

In this paper we propose a comprehensive model for environmentally significant consumption. The immediate purpose is to improve our ability to understand such consumption. The underlying purpose is to improve our ability to predict consumption and to improve our policy recommendations, in particular with respect to designing effective policy instruments. The model draws on insights from economics and social psychology, and attempts to synthesize these theories with respect to explaining environmentally significant consumption. We believe that the model adds three important elements to existing models of environmentally significant behavior: • It focuses more specifically on consumption. This links more directly to the environmental impact of the behavior than other types of models of environmentally significant behavior. • It draws more heavily on insights from economics, both by relating the expectancy-value construct to the characteristics of goods, and by including cost as a separate factor. • It opens up a wider hypothesis on policy instruments through showing the potential for the use of a diversified policy (information measures and incentives)

Understanding Public Support for Externality-Correcting Taxes and Subsidies: A Lab Experiment

31 p.The potential of taxation to correcting environmental externalities has been long recognized among economists. Yet, this welfare-enhancing policy commonly faces strong opposition by citizens. Conversely, externality-correcting subsidies frequently enjoy high levels of public acceptance. We conduct a lab experiment to explore public support for Pigouvian taxes and subsidies. In an experimental market with a negative externality, participants vote on the introduction of Pigouvian taxes and subsidies under full or partial information concerning how the tax revenues will be spent and the subsidy paid for. Theoretically the two instruments should produce identical outcomes. We find substantially greater support for subsidies than taxes. This can partially be explained by the expectation that the subsidy will increase payoffs more than a tax, but not because it could be more effective in changing behavior. Furthermore, we find that under partial information, the preference for subsidies is even stronger

Motivation crowding in real consumption decisions: Who is messing with my groceries?

We present evidence of crowding out of intrinsic motivation in real purchasing decisions from a field experiment in a large supermarket chain. We compare three instruments, a label, a subsidy and a neutral price change, in their ability to induce consumers to switch from dirty to clean products. Interestingly a subsidy framed as an intervention is less effective than either a label or a neutrally framed price change. We argue that this provides a new explanation for crowding behaviour: consumers are resistant to having the line of demarcation between public and private decision making moved - in either direction