scholarly journals The Economic Effects of Equalizing the Effective Carbon Rate of Sectors: An Input-Output Analysis

2020 ◽  
pp. 197-215
Author(s):  
Makoto Sugino
Keyword(s):  
Carbon Tax ◽  
Emission Trading ◽  
Carbon Price ◽  
Economic Effects ◽  
Carbon Taxes ◽  
Output Analysis ◽  
Energy Taxes ◽  
The Difference ◽  
Carbon Prices ◽  
Energy Intensive Industries

Abstract The 2 °C target of the Paris Agreement has stimulated the implementation of carbon reducing policies such as carbon taxes and emission trading schemes, which explicitly applies a price on carbon emitting fuels. However, OECD (2016) reports that the effective carbon rate must be at least 30 Euros per ton of CO2. The effective carbon rate includes the implicit carbon price, e.g. energy taxes, along with the explicit carbon price. Previous studies have focused on the effects of explicit carbon prices. In this chapter, we will focus on the effective carbon rate and estimate the effects of carbon policies that increase the effective carbon rate to the 30 Euro threshold. We find that the short-term effect of a carbon tax that raises the effective carbon rate for all industries above 30 Euros will not only effect energy intensive industries, but also downstream industries that already have high effective carbon rates. Furthermore, we find that the carbon tax implemented in 2012 increase the average effective carbon rate, but increases the difference between taxed emitters and non-taxed emitters. Thus, tax exemption for energy intensive industries sacrifices economic efficiency.

Setting Targets and the Choice of Policy Instruments for Limiting CO2 Emissions1

1994 ◽  
Vol 5 (4) ◽  
pp. 327-341 ◽  
Author(s):  
Zhongxiang Zhang
Keyword(s):  
Policy Making ◽  
Carbon Tax ◽  
Policy Instruments ◽  
Economic Instruments ◽  
Carbon Taxes ◽  
Emission Permits ◽  
Control Approach ◽  
Energy Taxes ◽  
And Control ◽  
Tradeable Carbon Permits

Increasing concern in scientific and policy making circles about the possibility of global warming induced by the accumulation of CO2 and other GHGs in the atmosphere has advanced for consideration of policies to limit emissions of these GHGs. This paper gives an overview of policy instruments that might be used to control CO2 emissions, including command-and-control approach, energy taxes, carbon taxes, and tradeable carbon permits, with special attention paid to the economic instruments. It highlights the differences between energy taxes and carbon taxes in terms of target achievement. It presents some main findings arising from those studies on carbon taxes, with the emphasis placed on some aspects of domestic carbon tax design and incidence. The allocations of emission permits (or reimbursement of carbon tax revenues) are also discussed. Moreover, a comparison of carbon taxes with tradeable carbon permits is briefly made. This paper ends with some conclusions.

scholarly journals COMBINING MULTIPLE CLIMATE POLICY INSTRUMENTS: HOW NOT TO DO IT

2010 ◽  
Vol 01 (03) ◽  
pp. 209-225 ◽  
Author(s):  
SAMUEL FANKHAUSER ◽  
CAMERON HEPBURN ◽  
JISUNG PARK
Keyword(s):  
Climate Change ◽  
Carbon Tax ◽  
Climate Change Policy ◽  
Policy Instruments ◽  
Carbon Price ◽  
Reserve Price ◽  
Cap And Trade ◽  
Change Policy ◽  
Hybrid Instruments ◽  
Carbon Prices

Putting a price on carbon is critical for climate change policy. Increasingly, policymakers combine multiple policy tools to achieve this, for example by complementing cap-and-trade schemes with a carbon tax, or with a feed-in tariff. Often, the motivation for doing so is to limit undesirable fluctuations in the carbon price, either from rising too high or falling too low. This paper reviews the implications for the carbon price of combining cap-and-trade with other policy instruments. We find that price intervention may not always have the desired effect. Simply adding a carbon tax to an existing cap-and-trade system reduces the carbon price in the market to such an extent that the overall price signal (tax plus carbon price) may remain unchanged. Generous feed-in tariffs or renewable energy obligations within a capped area have the same effect: they undermine the carbon price in the rest of the trading regime, likely increasing costs without reducing emissions. Policymakers wishing to support carbon prices should turn to hybrid instruments — that is, trading schemes with price-like features, such as an auction reserve price — to make sure their objectives are met.

The unpaid social cost of carbon

2018 ◽  
Vol 31 (2) ◽  
pp. 122-134 ◽  
Author(s):  
Martina Linnenluecke ◽  
Tom Smith ◽  
Robert E. Whaley
Keyword(s):  
Fossil Fuel ◽  
Social Cost ◽  
Carbon Tax ◽  
Emission Trading ◽  
Carbon Taxes ◽  
Social Cost Of Carbon ◽  
Content Type ◽  
Trading Scheme ◽  
Fossil Fuel Industry ◽  
Fuel Industry

Purpose This paper aims to examine the complex issue of the social cost of carbon. The authors review the existing literature and the strengths and deficiencies of existing approaches. They introduce a simple methodology that estimates the amount of “legal looting” in the fossil fuel industry as an alternative approach to calculate an unpaid social cost of carbon. The “looting amount” can be defined as society’s failure to charge fossil fuel firms for the damage that their activities cause represents an implied subsidy. Design/methodology/approach The methodology used in this paper combines decisions in the form of policymakers setting carbon taxes and rational investors investing in carbon emission markets. Findings The authors show that the unpaid social cost of carbon in the fossil fuel industry was US$12.7tn over 1995-2013, but may be as high as US$115.5tn. Originality/value Over the same period, the sum of industry profits, emission trading scheme carbon permit and carbon tax revenue totalled US$7tn, indicating the industry would not be viable if it was made to pay for damages to society.

scholarly journals POLICY INSIGHTS FROM THE EMF 32 STUDY ON U.S. CARBON TAX SCENARIOS

2018 ◽  
Vol 09 (01) ◽  
pp. 1840003 ◽  
Author(s):  
ALEXANDER R. BARRON ◽  
ALLEN A. FAWCETT ◽  
MARC A. C. HAFSTEAD ◽  
JAMES R. MCFARLAND ◽  
ADELE C. MORRIS
Keyword(s):  
Low Income ◽  
Policy Design ◽  
Carbon Tax ◽  
Carbon Price ◽  
The United States ◽  
Electricity Sector ◽  
Lump Sum ◽  
Near Term ◽  
Reduce Carbon Dioxide ◽  
Carbon Prices

The Stanford Energy Modeling Forum exercise 32 (EMF 32) used 11 different models to assess emissions, energy, and economic outcomes from a plausible range of economy-wide carbon price policies to reduce carbon dioxide (CO[Formula: see text] emissions in the United States. Here we discuss the most policy-relevant results of the study, mindful of the strengths and weaknesses of current models. Across all models, carbon prices lead to significant reductions in CO2 emissions and conventional pollutants, with the vast majority of the reductions occurring in the electricity sector. Importantly, emissions reductions do not significantly depend on the rebate or tax cut used to return revenues to the economy. Expected economic costs, as modeled by either GDP or welfare, are modest, but vary across models. These costs are offset by benefits from avoided climate damages and health benefits from reductions in conventional air pollution. Using revenues to reduce preexisting capital or labor taxes reduces costs in most models relative to lump-sum rebates, but the size of the cost reductions varies significantly. Devoting at least some revenue to household rebates can significantly reduce adverse impacts on low income households. Carbon prices at $25/ton or even lower levels cause significant shifts away from coal as an energy source with responses of other energy sources highly dependent upon technology cost assumptions. Beyond 2030, we conclude that model uncertainties are too large to make quantitative results useful for near-term policy design. We close by describing recommendations for policymakers on interacting with model results in the future.

scholarly journals Influencing factors of price fluctuation in China’s carbon market

2020 ◽  
Vol 218 ◽  
pp. 01044
Author(s):  
Qi Wei ◽  
Yuanyuan Bian ◽  
Xuejuan Yang
Keyword(s):  
Negative Impact ◽  
Positive Impact ◽  
Emission Trading ◽  
Carbon Price ◽  
Carbon Market ◽  
Coal Consumption ◽  
Factors Affecting ◽  
Price Signals ◽  
Carbon Emission Trading ◽  
Carbon Prices

Carbon emission trading is an important countermeasure for countries around the world to cope with the challenge of climate change. Price signals in the carbon market play an important stabilizing role. Therefore, research on the factors affecting carbon price fluctuations is of great significance. Based on this, an empirical study on the fluctuation factors of carbon price in China’s pilot carbon market showed that: gross industrial output, coal consumption and the number of extreme weather have a positive impact on carbon prices, while the technology innovation index has a negative impact on carbon prices. This article puts forward suggestions on the construction of the carbon market, stabilizes carbon prices, and promotes the development of China’s carbon market.

Carbon Taxes

2021 ◽  
Author(s):  
Jorge H. García ◽  
Thomas Sterner
Keyword(s):  
Low Income ◽  
Social Cost ◽  
Carbon Tax ◽  
Carbon Price ◽  
Low Income Countries ◽  
Carbon Taxes ◽  
Social Cost Of Carbon ◽  
Carbon Pricing ◽  
Sectoral Differences ◽  
Carbon Taxation

Economists argue that carbon taxation (and more generally carbon pricing) is the single most powerful way to combat climate change. Since this is so controversial, we need to explain it better, and to be precise, the efficiency gains are largest when the costs of abatement are strongly heterogeneous. This is often—but not always—the case. When it is not, standards can fill much the same role. To internalize the climate externality, economic efficiency calls for a global carbon tax (or price) that is equal to the global damage or the so-called social cost of carbon. However, equity considerations as well as existing geographical and sectoral differences in the effectiveness of carbon taxation at reducing emissions, suggest earlier implementation of relatively high taxation levels in some sectors or countries—for instance, among richer economies followed by a more gradual phase-in among low-income countries. The number of national and subnational carbon pricing policies that have been implemented around the world during the first years following the Paris Agreement of 2015 is significant. By 2020, these programs covered 22% of global emissions with an average carbon price (weighted by the share of emissions covered) of USD15/tCO2 and a maximum price of USD120/tCO2. The share of emissions covered by carbon pricing as well as carbon prices themselves are expected to consistently rise throughout the decade 2021–2030 and beyond. Many experts agree that the social cost of carbon is in the range USD40–100/tCO2. Anti-climate lobbying, public opposition, and lack of understanding of the instrument are among the key challenges faced by carbon taxation. Opportunities for further expansion of carbon taxation lie in increased climate awareness, the communicative resources governments have to help citizens understand the logic behind carbon taxation, and earmarking of carbon tax revenues to address issues that are important to the public such as fairness.

The Political Economy of Carbon Tax: International Practice and the Australian Model

2013 ◽  
Vol 01 (01) ◽  
pp. 1350007
Author(s):  
Alex LO
Keyword(s):  
Policy Design ◽  
Carbon Tax ◽  
Emission Trading ◽  
The Political ◽  
Carbon Taxes ◽  
Carbon Pricing ◽  
Fixed Price ◽  
Emissions Mitigation ◽  
Pricing System ◽  
Trading Scheme

Carbon taxes create incentives for controlling greenhouse gases by putting a price on these emissions. In theory major carbon emitters would pay more under an effective carbon tax. In practice political considerations often dominate and consequently compromise effectiveness in emissions mitigation. Australia's carbon pricing mechanism is a recent example. It involves the use of a fixed-price instrument that resembles a carbon tax and will eventually turn into an emission trading scheme and enable price fluctuation. The policy design is however questionable for overcompensating big polluters and legitimizing the failure to curb emissions domestically. This paper offers a review of the development of carbon tax policies in various national contexts with a focus on Australia. Lessons from the international practices could provide a useful reference for China to advance its timely commitment to establishing a carbon pricing system.

scholarly journals Multi-model comparison of Swiss decarbonization scenarios

2019 ◽  
Vol 155 (1) ◽  
Author(s):  
Florian Landis ◽  
Adriana Marcucci ◽  
Sebastian Rausch ◽  
Ramachandran Kannan ◽  
Lucas Bretschger
Keyword(s):  
Emission Reduction ◽  
Fossil Fuels ◽  
Model Comparison ◽  
Carbon Tax ◽  
Emission Trading ◽  
Economic Cost ◽  
Cost Effective ◽  
Carbon Taxes ◽  
Systems Model ◽  
Per Capita

Abstract Collaborating under the Swiss Energy Modeling Platform (SEMP), five modeling teams (employing an energy systems model and four macroeconomic models with a focus on energy) have carried out a multi-model comparison to assess the economic and technological consequences of reaching emission reduction targets for 2050 in the context of Switzerland. We consider different designs of carbon taxes to compare their economic cost: economy-wide or sector-specific carbon taxes with or without an emission trading system (ETS) in place. All models find that the climate targets can be reached at modest welfare reductions of 0.15–0.37% (if targeting 1.5 tonnes of CO 2 per capita) or 0.24–0.48% (if targeting 1.0 tonnes per capita) compared to a business-as-usual scenario in which the emission level of 1.5 tonnes per capita is exceeded by 83–137%. In contradiction to the additional target of reducing Swiss electricity use, most models find it cost-effective to replace some of the energy supplied by fossil fuels by electricity and thus do not recommend a decrease in electricity use.Most models find that a uniform carbon tax is the most efficient instrument to achieve the emission reduction targets. Those models with a detailed representation of pre-existing mineral oil taxes find that in early periods of climate policy, taxing emission from transport fuels at lower rates than other emissions may be cost-efficient. This effect vanishes as the stringency of targets and thus CO 2 taxes increase over time.

scholarly journals A Hybrid Forecasting Model for Nonstationary and Nonlinear Time Series in the Stochastic Process of CO2 Emission Trading Price Fluctuation

2020 ◽  
Vol 2020 ◽  
pp. 1-13
Author(s):  
Shanglei Chai ◽  
Mo Du ◽  
Xi Chen ◽  
Wenjun Chu
Keyword(s):  
Stochastic Process ◽  
Time Series ◽  
Emission Trading ◽  
Carbon Price ◽  
Superior Performance ◽  
Forecasting Model ◽  
Price Fluctuation ◽  
Hybrid Forecasting ◽  
Trading Scheme ◽  
Carbon Prices

Predicting CO2 emission prices is an important and challenging task for policy makers and market participants, as carbon prices follow a stochastic process of complex time series with nonstationary and nonlinear characteristics. Existing literature has focused on highly precise point forecasting, but it cannot correctly solve the uncertainties related to carbon price datasets in most cases. This study aims to develop a hybrid forecasting model to estimate in advance the maximum or minimum loss in the stochastic process of CO2 emission trading price fluctuation. This model can granulate raw data into fuzzy-information granular components with minimum (Low), average (R), and maximum (Up) values as changing space-description parameters. Furthermore, it can forecast carbon prices’ changing space with Low, R, and Up as inputs to support a vector regression. This method’s feasibility and effectiveness is examined using empirical experiments on European Union allowances’ spot and futures prices under the European Union’s Emissions Trading Scheme. The proposed FIG-SVM model exhibits fewer errors and superior performance than ARIMA, ARFIMA, and Markov-switching methods. This study provides several important implications for investors and risk managers involved in trading carbon financial products.

scholarly journals Green Procurement Decisions with Carbon Leakage by Global Suppliers and Order Quantities under Different Carbon Tax

2019 ◽  
Vol 11 (13) ◽  
pp. 3710 ◽  
Author(s):  
Rena Kondo ◽  
Yuki Kinoshita ◽  
Tetsuo Yamada
Keyword(s):  
Carbon Tax ◽  
Ghg Emissions ◽  
Electric Energy ◽  
Carbon Leakage ◽  
Carbon Taxes ◽  
Ghg Emission ◽  
Global Perspectives ◽  
Green Procurement ◽  
Order Quantities ◽  
Carbon Prices

Manufactures have been pressed to reduce greenhouse gas (GHG) emissions by environmental regulations and policies. Towards to reduction of GHG emissions, a carbon tax has been already introduced in 40 countries. Owing to different carbon prices among countries, there are potential risks of carbon leakage, where manufacturers transfer production operations to the countries with lower taxes to pursue lower costs. Moreover, procurement costs and GHG emissions vary by country because of economic conditions and electric energy mixes. Therefore, total GHG emissions could be globally reduced if manufactures relocate their production bases or switch suppliers in the country with lower GHG emission levels. This study proposes a green procurement decision for the supplier selection and the order quantity for minimizing GHG emission and costs considering the different carbon taxes in different countries. First, a bill of materials for each part is constructed through the life cycle inventory database with the Asian international input/output tables for a case study. Second, a green procurement decision considering the different carbon prices is formulated using integer programming. Finally, the results, including carbon leakage, are analyzed from the viewpoint of manufacturers, governments, and global perspectives.

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