|Description:||A tax on carbon leads to higher prices for carbon intensive fuels (such as fossil fuels), making low-carbon alternatives more attractive.|
|Is implemented in:||Energy conversion, Energy demand, Climate policy|
Associated policy response component
Effects of this policy intervention on components
Effect : A carbon tax will induce a transition from carbon intensive fuel to carbon low fuels. Since hydrogen and electricity are well suited for carrying carbon low energy, the production of hydrogen and electricity could increase.
Effect : The higher fossil fuel prices result in a shift towards less carbon-intensive energy carriers and (assuming a higher overall energy price) more energy efficiency. There can also be changes in end-use technologies ( e.g. electric cars in the transport sector, blast furnaces with CCS to produce iron and steel).
Effect : The energy supply will change from the use of carbon intensive energy carriers to the use of low/zero carbon energy carriers.
Effect : In the climate policy component, the carbon tax leads to emission reductions via Marginal Abatement Cost (MAC) curves derived from the TIMER model.
Effect : Induces a transition from carbon intensive fuels to carbon low fuels, thereby also lowering outdoor air pollution. Lower air pollution reduces mortality rates through reduced incidence of lung cancer, cardiopulmonary diseases and acute respiratory infections