A general model for CO2 regulation: the case of Denmark

Abstract For both economic, political and administrative reasons, a mixed design of permit market, bubble and tax may be preferable for CO 2 regulation. In the case of Denmark, a CO 2 market should be introduced for the private manufacturing sector and an administratively set CO 2 bubble should be introduced for the public electricity sector. Permits should then be devaluated in year 2005 by 20%. A CO 2 tax should be correctly set at a level of $50 in year 2005 for households, the transportation sector and private firms not participating in the CO 2 market. This model may guide future energy policies in other countries as well.

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