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Review Article

JCR. 2020; 7(2): 67-74


INVESTIGATION OF OPTIMAL CARBON TAX RATE IN IRAN USING AN INTEGRATED CLIMATE-ECONOMY MODEL

Mohammad Reza Rezaei, Hasan Faraazmand, Ahmad Salahmanesh, Yaghoub Andayesh.

Abstract
This study used an integrated climate-economy model for dynamic optimization of the carbon tax rate in Iran, which can serve as a key policy tool for controlling climate change through the internalization of social costs of carbon emissions. For this purpose, the optimal carbon tax rate in Iran for 18 five-year periods from 2011 to 2101 was estimated using the data pertaining to the 2011-2016 period based on three approaches: social cost of carbon, temperature changes, and emission changes. The results showed that using the first approach, the optimal carbon tax rate for the Iranian economy would be 50 Rials/tonne in the beginning and 350 Rials/tonne in the later periods. Using the second and third approaches, this rate would be 15% at the beginning of the period and reach as high as 38% under the worst emission conditions.

Key words: Social Cost of Carbon, Climate Change, CO2, Side Effects.



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