Leakage, Welfare, and Cost-Effectiveness of Carbon Policy
نویسنده
چکیده
We extend the model of Fullerton et al (2011) to explore cost-effectiveness of unilateral climate policy in the presence of leakage. We ignore the welfare gain from reducing greenhouse gas emissions and focus on the welfare cost of the emissions tax or permit scheme. Whereas that prior paper solves for changes in emissions quantities and finds that leakage maybe negative, we show here that all cases with negative leakage in that model are cases where a unilateral carbon tax results in a welfare loss. With positive leakage, however, a unilateral policy can improve welfare. Our email addresses are [email protected], [email protected] and [email protected]. This paper is extremely preliminary; please do not send it to anybody.
منابع مشابه
Carbon Tariffs: Effects in Settings with Technology Choice and Foreign Comparative Advantage
Working papers are in draft form. This working paper is distributed for purposes of comment and discussion only. It may not be reproduced without permission of the copyright holder. Copies of working papers are available from the author. Carbon regulation is intended to reduce global emissions, but there is growing concern that such regulation may simply shift production to unregulated regions ...
متن کاملEfficiency and Equity Implications of Alternative Instruments to Reduce Carbon Leakage
The cost-effectiveness of unilateral emission abatement can be seriously hampered by emission leakage. We assess three widely-discussed proposals for leakage reduction targeted at energyintensive and trade-exposed industries: border tax adjustments, output-based allocation and industry exemptions. We find that none of these measures amounts to a “magic bullet” when both efficiency and equity cr...
متن کاملiffs The Strategic Value of Carbon Tariffs
Unilateral carbon policies are inefficient due to the fact that they generally involve emission reductions in countries with high marginal abatement costs and because they are subject to carbon leakage. In this paper, we ask whether the use of carbon tariffs — tariffs on the carbon embodied in imported goods — might lower the cost of achieving a given reduction in world emissions. Specifically,...
متن کاملAn emissions trading scheme design for power industries facing price regulation
The electricity market, monopolistic in nature, with government price regulation, poses a serious challenge for policy makers with respect to the cost-effectiveness of emissions trading, particularly in Asian countries. This paper argues that a cap-and-trade regulatory system for indirect emissions combined with a rate-based allocation system for direct emissions can achieve market efficiency e...
متن کاملMoving U.S. Climate Policy Forward: Are Carbon Taxes the Only Good Alternative?
This paper estimates the welfare costs of the main medium-term options for significantly reducing U.S. energy-related carbon dioxide (CO2) emissions, including carbon taxes and cap-and-trade systems applied economy-wide and to the power sector only, and an emissions rate standard for power generation. The key theme is that welfare costs depend importantly on how policies interact with distortio...
متن کامل