This session we will be looking at a number of issues related to climate and energy as well as related air pollution issues. One of the topics i will spend more time on is refunded emission payments, an instrument that you will use in the Case study you are working with during this period. This is an instrument that is similar to a tax and also similar to a certain kind of permit trade and so the idea is that this will help you get accustomed to comparing and analyzing the different policy instruments. Think about the following question:

Which kind of permit allocation is REP similar to: Auctioned permits, Grandfathered permits or Output-Allocated permits?

The relevant literature is in chapters 7, 12, 20 - 21 of Sterner & Coria. In particular you must look at pages 112-114, 202-3, 343-4.

In class I will talk about refunding emission payments - used in Sweden and Norway to deal with NOx emissions. This is a politically interesting tool that puts a high price on emissions but does not raise revenue for the government - instead the money goes back to the polluters -- in different ways that we will discuss.

One more question for you to think about: There is a lot of resistance to pure taxes. Can refunding (like REP) be a solution to make taxes more acceptable? This is a second topic that we will discuss with respect in particular to transport related taxes like fuel taxes and blending mandates.

For those who want to know more consult the webpages of the swedish environmental protection agency https://www.naturvardsverket.se/data-och-statistik/luft/utslapp/utslapp-av-kvaveoxider-till-luft/ (in swedish).

Reading: SC, Ch. (7, 12), 20-21 (Extra reading is an article comparing Norwegian and Swedish refunding)

Sterner & Coria, chapter 7.pdf

Sterner & Coria, chapter 12.pdf

Extra reading: Hagem, C., Hoel, M., & Sterner, T. (2020) (LINK). Refunding Emission Payments: Output-Based versus Expenditure-Based Refunding. https://doi.org/10.1007/s10640-020-00513-1

Finally I will also continue to speak more of policy acceptability when it comes to carbon pricing.

Thomas