Optimal climate policy when warming rate matters
Nicolas Taconet  1@  
1 : Centre International de Recherche sur lÉnvironnement et le Développement  (CIRED)  -  Site web
Centre National de la Recherche Scientifique : UMR8568, Ecole des Ponts ParisTech, AgroParisTech, École des Hautes Études en Sciences Sociales, Centre de Coopération Internationale en Recherche Agronomique pour le Développement : UMR56
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Studies of the Social Cost of Carbon assume climate change is a stock externality for which damages stem from warming level. However, economic and natural systems are also sensitive to the rate at which warming occurs. In this paper, I study the optimal carbon tax when such a feature is accounted for. I show that damages caused by warming rates do not affect optimal long-term warming, but they delay the use of the same carbon budget. Numerically, optimal carbon price should be 39% higher, compared to when damages solely stem from warming level.

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