Files
Abstract
In this paper we investigate the introduction of an export tax on steam coal levied by an
individual country (Australia), or a group of major exporting countries. The policy
motivation would be twofold: generating tax revenues against the background of improved
terms-of-trade, while CO2 emissions are reduced. We construct and numerically apply a
two-level game consisting of an optimal policy problem at the upper level, and an
equilibrium model of the international steam coal market (based on COALMOD-World) at
the lower level. We find that a unilaterally introduced Australian export tax on steam coal
has little impact on global emissions and may be welfare reducing. On the contrary, a tax
jointly levied by a "climate coalition" of major coal exporters may well leave these better
off while significantly reducing global CO2 emissions from steam coal by up to 200 Mt
CO2 per year. Comparable production-based tax scenarios consistently yield higher tax
revenues but may be hard to implement against the opposition of disproportionally
affected local stakeholders depending on low domestic coal prices.