Under What Conditions Does a Carbon Tax on Fossil Fuels Stimulate Biofuels?
A carbon tax is an efficient economic
instrument to reduce emissions of carbon dioxide released
from fossil fuel burning. Its impacts on production of
renewable energy depend on how it is designed --
particularly in the context of the penetration of biofuels
into the energy supply mix for road transportation. Using a
multi-sector, multi-country computable general equilibrium
model, this study shows first that a carbon tax with the