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How I learned to stop worrying and love the RET

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  • Quiggin, John

Abstract

In this chapter, it is argued on the contrary that the RET is not merely complementary to the carbon market, but is a welfare-improving policy, even after the introduction of the carbon price. The central argument is that, because of political resistance to carbon pricing, the price has been set at a level that is below that of the optimal path, and must increase more rapidly than would be consistent with a Hotelling rule (Hotelling 1931). The relevant criterion for assessing the RET is not the cost of mitigation relative to the current carbon price but the cost relative to the true shadow price of CO2 emissions, which must be assessed in relation to abatement costs that must be incurred in the future if emissions are to be reduced in line with the government’s stated targets.

Suggested Citation

  • Quiggin, John, 2013. "How I learned to stop worrying and love the RET," Risk and Sustainable Management Group Working Papers 152099, University of Queensland, School of Economics.
    • Handle: RePEc:ags:uqsers:152099
    DOI: 10.22004/ag.econ.152099
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    File URL: https://ageconsearch.umn.edu/record/152099/files/C13_2.pdf
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    References listed on IDEAS

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    1. John Quiggin, 2012. "Stabilizing the Global Climate: A Simple and Robust Benefit-Cost Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 94(2), pages 291-300.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Fossil fuel review committee report: change rules to benefit fossil fuels
      by John Quiggin in John Quiggin on 2014-08-29 05:47:55

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    Keywords

    Environmental Economics and Policy; Resource /Energy Economics and Policy;

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