scholarly journals Could revenue recycling make effective carbon taxation politically feasible?

2019 ◽  
Vol 5 (9) ◽  
pp. eaax3323 ◽  
Author(s):  
Liam F. Beiser-McGrath ◽  
Thomas Bernauer
Keyword(s):  
Carbon Tax ◽  
Public Support ◽  
The United States ◽  
Policy Instrument ◽  
Industrialized Countries ◽  
Carbon Taxes ◽  
Playing Field ◽  
Revenue Recycling ◽  
Carbon Taxation ◽  
Global Energy Supply

Carbon taxes are widely regarded as a potentially effective and economically efficient policy instrument for decarbonizing the global energy supply and thus limiting global warming. The main obstacle is political feasibility because of opposition from citizens and industry. Earmarking revenues from carbon taxation for spending that benefits citizens (i.e., revenue recycling) might help policy makers escape this political impasse. On the basis of choice experiments with representative samples of citizens in Germany and the United States, we examine whether revenue recycling could mitigate two key obstacles to achieving sufficient public support for carbon taxes: (i) declines in support as taxation levels increase and (ii) concerns over the international economic level playing field. For both countries, we find that revenue recycling could help achieve majority support for carbon tax levels of up to $50 to $70 per metric ton of carbon, but only if industrialized countries join forces and adopt similar carbon taxes.

Behavioural Economics and Public Support for Carbon Pricing: A Revenue Recycling Scheme to Address the Political Economy of Carbon Taxation

2019 ◽  
Vol 10 (3) ◽  
pp. 554-570 ◽  
Author(s):  
Goran DOMINIONI ◽  
Dirk HEINE
Keyword(s):  
Rural Areas ◽  
Public Support ◽  
Developed Countries ◽  
Policy Instrument ◽  
Tax Rates ◽  
Carbon Taxes ◽  
Carbon Pricing ◽  
Revenue Recycling ◽  
Carbon Taxation ◽  
Urban And Rural Areas

Even though carbon pricing is widely accepted as the most efficient policy instrument for climate change mitigation, it has been severely held back by a lack of public support. Building on research in behavioural sciences, we propose a revenue recycling scheme that aims to foster public support for carbon taxes. The scheme has two main strengths: (i) it may allow the implementatin of carbon taxes with higher tax rates than those currently prevailing in most jurisdictions; (ii) it relies on a number of accessible technologies, and thus it can be implemented in a wide variety of settings, both in urban and rural areas of developing and developed countries.

scholarly journals THE IMPACT OF CARBON TAXATION AND REVENUE RECYCLING ON U.S. INDUSTRIES

2018 ◽  
Vol 09 (01) ◽  
pp. 1840005 ◽  
Author(s):  
NICK MACALUSO ◽  
SUGANDHA TULADHAR ◽  
JARED WOOLLACOTT ◽  
JAMES R. MCFARLAND ◽  
JARED CREASON ◽  
...  
Keyword(s):  
Carbon Tax ◽  
The United States ◽  
Cross Model ◽  
Qualitative And Quantitative ◽  
Revenue Recycling ◽  
Sectoral Output ◽  
United States Economy ◽  
Production And Consumption ◽  
Carbon Taxation ◽  
The Impact

This paper provides a detailed, cross-model analysis and discussion of the implications of carbon tax scenarios on changes in sectoral output, energy production and consumption and the competitiveness of the United States’ economy. Our analysis focuses on the broad patterns apparent across models in both qualitative and quantitative terms at the sector level, with a focus on energy-intensive, trade-exposed sectors. We identify how variations in carbon tax trajectories and different options for using the revenue from the tax drive these results.

The possible macroeconomic and sectoral impacts of carbon taxation on Turkey’s economy: A computable general equilibrium analyses

2018 ◽  
Vol 29 (5) ◽  
pp. 784-801
Author(s):  
Levent Aydın
Keyword(s):  
General Equilibrium ◽  
Carbon Emissions ◽  
Computable General Equilibrium ◽  
Carbon Tax ◽  
Model Simulation ◽  
Effective Means ◽  
Carbon Taxes ◽  
Rate Of Increase ◽  
Carbon Taxation ◽  
Per Capita

Although the idea of carbon tax was debated widely in the early 1970s, the first carbon taxes were imposed in some Northern European countries at the beginning of the 1990s. Since the Paris summit in 2015, there has been a growing interest in carbon tax that has begun to increase again. Although Turkey’s share of carbon emissions in terms of total global emissions is low, the rate of increase in emissions has increased in recent years and should be a cause for concern. Therefore, the aim of this paper is to analyze the possible effects of carbon taxes on Turkey’s economy by disaggregating the electricity sector a by using the computable general equilibrium model. Simulation results show that carbon taxation is a highly effective means to reduce carbon emissions. Despite all sectors being adversely affected, some low emission energy, textile, and other service sectors benefit from carbon pricing. The results also indicate macroeconomic costs of imposing a carbon tax at $7 per ton of carbon in terms of the decrease in GDP by 0.061% and associated with per capita utility of the representative household by 0.09% in scenario a. Imposition of successively higher carbon taxes in scenario b and scenario c results in 5.75, 12.02, and 16.95% reduction in carbon emissions at decreasing rate, respectively. However, these reductions are also accompanied by a decrease in real GDP and per capita utility from household expenditure, as macroeconomic costs, in scenarios a, b, and c at increasing rates.

scholarly journals REGIONAL IMPLICATIONS OF NATIONAL CARBON TAXES

2018 ◽  
Vol 09 (01) ◽  
pp. 1840008 ◽  
Author(s):  
MARTIN T. ROSS
Keyword(s):  
Computable General Equilibrium ◽  
Carbon Tax ◽  
The United States ◽  
Computable General Equilibrium Model ◽  
Political Support ◽  
Carbon Taxes ◽  
Household Spending ◽  
Spending Patterns ◽  
Regional Factor ◽  
State Regional

This paper examines impacts of nationally-imposed carbon taxes on different regions of the United States. The goal is to see what can be learned about the drivers of regional political support for and opposition to such measures. Whether at the state, regional or national levels, carbon taxes are one option for reducing greenhouse gas emissions; several state and regional programs are already under way and lowering emissions. This analysis uses a U.S. regional version of the DIEM computable general equilibrium model to explore relationships between carbon taxes, emissions, and economic growth. One area of emphasis is how the distribution of impacts may be affected by differences in regional household spending patterns, the types of industries and electricity generation situated in those regions, and the locations of energy production and energy-intensive manufacturing. The modeling also explores how carbon tax revenues can be used to offset impacts on regional factor earnings.

scholarly journals Mental accounting shapes public support for green spending of carbon tax revenues

2022 ◽  
Author(s):  
Mathilde Mus ◽  
Coralie Chevallier ◽  
Hugo Mercier
Keyword(s):  
Environmental Protection ◽  
Carbon Tax ◽  
Public Support ◽  
Value Added ◽  
Mental Accounting ◽  
Social Acceptability ◽  
Tax Revenues ◽  
The United Kingdom ◽  
Carbon Taxation ◽  
Mental Budgets

Despite its potential for curbing greenhouse gas emissions, carbon taxation encounters strong public resistance in many countries. However, social acceptability of carbon taxation heavily depends on how the generated revenues are used. Citizens prefer carbon taxation schemes where tax revenues are earmarked for environmental protection rather than for non-environmental purposes (e.g., lowering the value-added tax or labour taxes). Here, we test the hypothesis that acceptability varies across earmarking domains according to a mental accounting heuristic, by which people create mental budgets where the origin of revenues is matched thematically with their domain of use. Across two experiments conducted in the United Kingdom and in France (Ntotal = 3500), we show that citizens display a specific preference for tax designs where the earmarking domain is matched with the revenue source (i.e. a carbon tax earmarked for environmental protection), relative to an unmatched tax scheme. Moreover, we find that acceptability of carbon taxation increases with the proportion of tax revenues earmarked for environmental protection.

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.

scholarly journals An Assessment of Japanese Carbon Tax Reform Using the E3MG Econometric Model

2012 ◽  
Vol 2012 ◽  
pp. 1-9 ◽  
Author(s):  
Soocheol Lee ◽  
Hector Pollitt ◽  
Kazuhiro Ueta
Keyword(s):  
Tax Reform ◽  
Econometric Model ◽  
Carbon Tax ◽  
Positive Outcome ◽  
Economic Benefits ◽  
Tax Rates ◽  
Revenue Recycling ◽  
University Of Cambridge ◽  
Carbon Taxation ◽  
The University

This paper analyses the potential economic and environmental effects of carbon taxation in Japan using the E3MG model, a global macroeconometric model constructed by the University of Cambridge and Cambridge Econometrics. The paper approaches the issues by considering first the impacts of the carbon tax in Japan introduced in 2012 and then the measures necessary to reduce Japan’s emissions in line with its Copenhagen pledge of −25% compared to 1990 levels. The results from the model suggest that FY2012 Tax Reform has only a small impact on emission levels and no significant impact on GDP and employment. The potential costs of reducing emissions to meet the 25% reduction target for 2020 are quite modest, but noticeable. GDP falls by around 1.2% compared to the baseline and employment by 0.4% compared to the baseline. But this could be offset, with some potential economic benefits, if revenues are recycled efficiently. This paper considers two revenue recycling scenarios. The most positive outcome is if revenues are used both to reduce income tax rates and to increase investment in energy efficiency. This paper shows there could be double dividend effects, if Carbon Tax Reform is properly designed.

Introducing Carbon Taxes in Russia: The Relevance of Tax-Interaction Effects

2014 ◽  
Vol 14 (3) ◽  
pp. 723-754 ◽  
Author(s):  
Anton Orlov ◽  
Harald Grethe
Keyword(s):  
Carbon Tax ◽  
International Mobility ◽  
Carbon Taxes ◽  
Welfare Gains ◽  
Lump Sum ◽  
Corrective Effect ◽  
Carbon Taxation ◽  
Distortionary Taxes ◽  
Tax Interaction ◽  
The Cost

Abstract The theoretical literature on the double-dividend concept is mainly focused on pre-existing distortionary taxes in the labour and capital markets; the relevance of interactions with other taxes is often neglected. Using an analytical model and a numerical general equilibrium model, we analyse the welfare effects of carbon taxes and their interaction with other taxes applied in Russia. We find that substituting carbon taxes for labour taxes in Russia can substantially reduce the cost of carbon taxation compared to returning carbon tax revenues to households in lump-sum form and can even result in welfare gains in Russia. In conclusion, introducing carbon taxes has an indirect corrective effect with respect to the distorting effect of export taxation on energy resources. Furthermore, welfare costs of carbon taxation can be significant under the assumption of perfect international mobility of capital. Nevertheless, the cost can be more than compensated in case of a high carbon trade price.

scholarly journals Environmental Effects of Carbon Taxes: A Review and Case Study

2017 ◽  
Vol 4 (2) ◽  
pp. 7 ◽  
Author(s):  
Zheng Li ◽  
Junjing Zhao
Keyword(s):  
Co2 Emissions ◽  
Environmental Effects ◽  
Carbon Tax ◽  
Carbon Taxes ◽  
Additional Costs ◽  
Effective Instrument ◽  
Carbon Taxation ◽  
Reduce Emissions ◽  
Carbon Dioxide Co2

A carbon tax imposes additional costs on emission-intensive fuels so as to reduce emissions. The primary aim of this paper is to investigate the environmental effects of carbon taxes. First, this paper reviews existing studies which evaluated the effects of carbon taxes on carbon dioxide (CO2) emissions for different countries. The review shows that carbon taxation is an effective instrument to reduce CO2 emissions. Then, Transportation and Environment Strategy Impact Simulator (TRESIS) is used to assess the impacts of a carbon tax on car use and CO2 emissions in the Sydney metropolitan area, and results shows that it would reduce CO2 emissions by 3.7 percent and reduce car kilometres driven by 3.5 percent in 2017. Its potential economic impact in terms of revenue generated is also presented in this paper.

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