Abstract
Countries around the world are enacting climate policies such as coal phase-outs, aviation taxes, and renewable energy support. These policies often overlap with a wider multi-jurisdictional carbon-pricing system like the EU’s Emissions Trading System. We develop a general framework to study how effectively such “overlapping climate policies” can help combat climate change—depending on their design, location and timing. We find that some policies are truly complementary while others backfire by raising aggregate emissions. At a conceptual level, our model encompasses the market design of most carbon-pricing systems used in practice and a wide range of popular unilateral climate policies.
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