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.

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 The Political Economy of Carbon Pricing: Lessons from the Mexican Carbon Tax Experience for the Mexican Cap-and-Trade System

2021 ◽  
pp. 133-150
Author(s):  
Juan Carlos Belausteguigoitia ◽  
Vidal Romero ◽  
Alberto Simpser
Keyword(s):  
Political Economy ◽  
Carbon Tax ◽  
International Environmental Agreements ◽  
Climate Change Policy ◽  
Policy Instruments ◽  
The Political ◽  
Carbon Taxes ◽  
Cap And Trade ◽  
Carbon Pricing ◽  
Change Policy

AbstractPrice-based climate change policy instruments, such as carbon taxes or cap-and-trade systems, are known for their potential to generate desirable results such as reducing the cost of meeting environmental targets. Nonetheless, carbon pricing policies face important economic and political hurdles. Powerful stakeholders tend to obstruct such policies or dilute their impacts. Additionally, costs are borne by those who implement the policies or comply with them, while benefits accrue to all, creating incentives to free ride. Finally, costs must be paid in the present, while benefits only materialize over time. This chapter analyses the political economy of the introduction of a carbon tax in Mexico in 2013 with the objective of learning from that process in order to facilitate the eventual implementation of an effective cap-and-trade system in Mexico. Many of the lessons in Mexico are likely to be applicable elsewhere. As countries struggle to meet the goals of international environmental agreements, it is of utmost importance that we understand the conditions under which it is feasible to implement policies that reduce carbon emissions.

China Emission Trading Scheme: An Up-to-Date Analysis

2014 ◽  
Vol 1073-1076 ◽  
pp. 2788-2790
Author(s):  
Dan Chu ◽  
Ru Guo ◽  
Feng Ting Li
Keyword(s):  
Policy Design ◽  
Emission Trading ◽  
Eu Ets ◽  
Policy Makers ◽  
The Public ◽  
Chinese Characteristics ◽  
National Market ◽  
Real Performance ◽  
Trading Scheme ◽  
Carbon Emission Trading

Becoming the second largest carbon market after the EU ETS in the world, China steadily runs the pilot carbon emission trading markets for more than half year. Political and economical context with Chinese Characteristics cultivated a new market from previous EU ETS. Intensive enterprise compliance in June and July witnessed an examination on policy design and implementation. Do the answers test the real performance and satisfy with domestic policy makers, enterprises and the public? Anyway, insights from existing pilot markets will be useful for future national market also for other emerging regimes.

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.

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.

Are Carbon Taxes Regressive in India? Evidence from NSSO Data

2019 ◽  
Vol 67 (1-2) ◽  
pp. 30-44
Author(s):  
Aaqib Ahmad Bhat ◽  
Prajna Paramita Mishra
Keyword(s):  
Energy Use ◽  
Carbon Tax ◽  
Electricity Consumption ◽  
National Sample ◽  
Sample Survey ◽  
Liquefied Petroleum Gas ◽  
Carbon Taxes ◽  
Carbon Pricing ◽  
Lump Sum ◽  
Poor Households

Carbon tax, being less costly in achieving a given abatement target, has been highly recommended by economists and international organisations. However, distributional concerns against the carbon tax has been a matter of concern in the domain of public policy. This article tries to analyse the distributional impact of Carbon tax in India by using National Sample Survey Office (NSSO) data. The results of the study indicate that carbon pricing seems to hit the lower-expenditure households by a greater proportion than the rich elites. The severity was found to be greater for the rural households than the urban households. Strong regressivity was found in the energy use for cooking and lighting. However, for transportation, the results indicate mild progressivity. Among the various energy fuels, households using coal, liquefied petroleum gas (LPG), kerosene, firewood and dung cake for cooking and lighting were found to be hit hard by carbon pricing. In contrast, electricity consumption was found to be distributionally neutral. Petrol and diesel use for transportation were found to be progressive. The study advocates that regressivity of carbon tax should be taken into account by way of targeted revenue recycling measures like lump-sum transfers among poor households and cut in other distortionary taxes.

CAN CARBON TAX COMPLEMENT EMISSION TRADING SCHEME? THE IMPACT OF CARBON TAX ON ECONOMY, ENERGY AND ENVIRONMENT IN CHINA

2020 ◽  
Vol 11 (03) ◽  
pp. 2041002
Author(s):  
BOQIANG LIN ◽  
ZHIJIE JIA
Keyword(s):  
Computable General Equilibrium ◽  
Carbon Tax ◽  
Emission Trading ◽  
Emission Trading Scheme ◽  
Emission Mitigation ◽  
Demand And Supply ◽  
Energy And Environment ◽  
Energy Environment ◽  
Trading Scheme ◽  
The Impact

The problems of excessive CO2 emissions and global warming caused by human activities are becoming more serious. Carbon Tax (CT) and Emission Trading Scheme (ETS) are popular emission mitigation mechanisms. This paper establishes four counter-factual (CF) scenarios with different CT rate, and constructs a dynamic recursive computable general equilibrium (CGE) model, named China Energy-Environment-Economy Analysis (CEEEA) model, to study the impact of different CT rate on the economy, energy and environment. The results indicate that if CT complement ETS, and the cap of ETS is based on grandfathering method, the carbon trading price will reduce due to the changes in carbon allowances demand and supply. CT can share the mitigation pressure from ETS coverages into non-ETS coverages. When CT complement ETS but nothing is changed in mechanism of emission trading, the total emission mitigation effect will reduce slightly but the mitigation cost will reduce significantly. All in all, using CT as the supplement is a good mitigation strategy to release Gross Domestic Product (GDP) loss. But if we want to get more mitigation effect, rising CT rate or a stricter carbon cap may help.

scholarly journals An overview of Natural Gas Use in Ships: Necessity and Engine Supply

2018 ◽  
Author(s):  
Justas Žaglinskis ◽  
Paulius Rapalis ◽  
Nadezda Lazareva
Keyword(s):  
Energy Efficiency ◽  
Natural Gas ◽  
Power Plants ◽  
Carbon Tax ◽  
Emission Trading ◽  
Management Plan ◽  
Engine Exhaust ◽  
Control And Prevention ◽  
Trading Scheme ◽  
Energy Efficiency Design Index

The article consists of analysis of existing and planned air pollution from ships control and prevention tools such Marpol 73/78 Annex VI, Energy Efficiency Design Index, Energy efficiency operational indicator, Ship energy efficiency management plan, Regulation on the Monitoring Reporting and Verification of shipping emissions, Carbon tax, Maritime emission trading scheme. Norms of these control and prevention tools are difficult to ensue using traditional marine fuels. Pollution rates getting tighter and alternatives have to be used, and some of them have long been known and are not widely used due to objective reasons. Such alternative is natural gas, and its use in ship power plants could reduce concentrations of nitrogen, sulphur, carbon compounds and other pollutants in engine exhaust gas up to acceptable level. The part of maritime sector choosing gas or dual-fuel engines due to tighter pollution rates, and the supply of these engines analyzed in last part of article.

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.

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