instruments and quantity instruments. In this paper, we compare the two instruments in the presence of market uncertainty … intensity (i.e., emissions per unit of production) and the market uncertainty are both high or low, the expected social welfare …, especially for high-emitting industries when the market uncertainty is intermediate. The results are robust when incorporating …

or 1.5oC. The safe carbon budget is lower if uncertainty about the transient climate response is high and risk tolerance …Cumulative emissions drive peak global warming and determine the safe carbon budget compatible with staying below 2oC … low. Together with energy costs this budget determines the constrained welfare-maximizing carbon price and how quickly …