Optimal decisions for competitive manufacturers under carbon tax and cap-and-trade policies

2021 ◽  
pp. 107244
Author(s):  
Hongxia Sun ◽  
Jie Yang
Keyword(s):  
Carbon Tax ◽  
Trade Policies ◽  
Cap And Trade ◽  
Optimal Decisions

scholarly journals Cost-Effectiveness Implications of Carbon Price Certainty

2020 ◽  
Vol 110 ◽  
pp. 113-118
Author(s):  
Joseph E. Aldy ◽  
Sarah Armitage
Keyword(s):  
Cost Effectiveness ◽  
Carbon Tax ◽  
Pollution Abatement ◽  
Cost Effective ◽  
Carbon Price ◽  
Trade Policies ◽  
Price Uncertainty ◽  
Cap And Trade ◽  
Emission Abatement ◽  
Resource Costs

While a firm knows the carbon price with certainty under a tax, it must form an expectation about future allowance prices to identify its cost-effective abatement investment under a capand-trade program. We illustrate graphically how errors in forming this expectation increase the costs of irreversible pollution abatement investment under cap-and-trade relative to a tax. We describe empirical “cost-effectiveness anomalies” in allowance markets that may be attributed to cap-and-trade's inherent uncertainty. We model investment under simulated US carbon tax and cap-and-trade policies and find that allowance price uncertainty can increase resource costs 20 percent for a given quantity of emission abatement.

Cap and Trade Versus Carbon Tax: An Analysis Based on a CGE Model

2021 ◽  
Author(s):  
Jin-Feng Zhou ◽  
Dan Wu ◽  
Wei Chen
Keyword(s):  
Carbon Tax ◽  
Cge Model ◽  
Cap And Trade

scholarly journals Optimal Decisions for Two Risk-Averse Competitive Manufacturers under the Cap-and-Trade Policy and Uncertain Demand

2020 ◽  
Vol 17 (3) ◽  
pp. 1010 ◽  
Author(s):  
Hongxia Sun ◽  
Jie Yang ◽  
Yang Zhong
Keyword(s):  
Decision Making ◽  
Carbon Emissions ◽  
Emission Reduction ◽  
Carbon Emission ◽  
Reduction Rate ◽  
Risk Averse ◽  
Cap And Trade ◽  
Carbon Emission Reduction ◽  
Optimal Decisions ◽  
The Government

With the increasingly serious problem of environmental pollution, reducing carbon emissions has become an urgent task for all countries. The cap-and-trade (C&T) policy has gained international recognition and has been adopted by several countries. In this paper, considering the uncertainty of market demand, we discuss the carbon emission reduction and price policies of two risk-averse competitive manufacturers under the C&T policy. The two manufacturers have two competitive behaviors: simultaneous decision making and sequential decision making. Two models were constructed for these behaviors. The optimal decisions, carbon emission reduction rate, and price were obtained from these two models. Furthermore, in this paper the effects of some key parameters on the optimal decision are discussed, and some managerial insights are obtained. The results show that the lower the manufacturers’ risk aversion level is, the higher their carbon emission reduction rate and utilities. As the carbon quota increases, the manufacturers’ optimal carbon reduction rate and utilities increase. Considering consumers’ environmental awareness, it is more beneficial for the government to reduce the carbon quota and motivate manufacturers’ internal enthusiasm for emission reduction. The government can, through macro control of the market, make carbon trading prices increase appropriately and encourage manufacturers to reduce carbon emissions.

scholarly journals Carbon tax or cap-and-trade: Which is more viable for Chinese remanufacturing industry?

2020 ◽  
Vol 243 ◽  
pp. 118606 ◽  
Author(s):  
Xu Hu ◽  
Zhaojun Yang ◽  
Jun Sun ◽  
Yali Zhang
Keyword(s):  
Carbon Tax ◽  
Cap And Trade

Carbon tax versus cap-and-trade

2009 ◽  
Vol 18 (4) ◽  
pp. 95-100 ◽  
Author(s):  
Jim DiPeso
Keyword(s):  
Carbon Tax ◽  
Cap And Trade

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.

Sign in / Sign up

Export Citation Format

Share Document