Carbon Taxes vs. Cap and Trade: A Critical Review

Goulder, Lawrence H.; Schein, Andrew Ribet

doi:10.2139/ssrn.2308219

Cited by 27 publications

(43 citation statements)

References 42 publications

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“…Table 1 presents the articles reviewed. (Gupta & Mason, 2016) (Bodansky & Rajamani, 2013) (Ventura, et al, 2015) (Stewart, et al, 2013) (Moncel & Asselt, 2012) (Otto, et al, 2014) (Marcucci & Turton, 2013) (Kriegler, et al, 2015) (Riahi, et al, 2015) (Arroyo-Currás, et al, 2015) (Briner & Prag, 2013) (Chaturvedi, 2015) (Glomsrød, et al, 2013) (Gilley & Kinsella, 2015) Carbon tax 10 (Strand, 2013) (Alton, et al, 2014) (Wang & Li, 2015) (Gale, et al, 2013) ) (Elliott & Fullerton, 2013) (Sundar, et al, 2016) (Brooks, 2015) (Pezzey & Jotzo, 2013) (Lamperti, et al, 2015) Emission trading, trade, carbon markets 10 (Perthuis & Trotignon, 2013) (Uddin & Holtedahl, 2013) (Anon., 2013) ) (Lutz, et al, 2013) (Rabe, 2016) (Stiglitz, 2015) (Cormier, 2013) (Erickson, et al, 2014) (Sreekanth, et al, 2014) Carbon tax and cap-and trade 5 (Goulder & Schein, 2013) (Lui, 2016) (Sewalk, 2013) (Repetto, 2013) Minilateralism 8 (Debaere, et al, 2014) (Falkner, 2015) (Hjerpe & Nasiritousi, 2015) …”

Section: Resultsmentioning

confidence: 99%

“…They assumed that putting a price on carbon is widely accepted as being far cheaper for countries overall than regulation and tax is the most effective way to put a price on carbon. According to the review by Goulder & Schein (2013) a hybrid scheme with a carbon tax as a part of climate change mitigation strategy is suggested. The authors found that putting a price to carbon is the more cost-effective than direct regulation, but a neither a pure carbon tax or pure cap-and trade can solely solve the problem.…”

Section: Carbon Taxmentioning

confidence: 99%

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Institutional Analysis of the Global Climate Change Regime: Literature Review of International Climate Negotiations

Havukainen¹

2017

International Conference on Climate Change

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Abstract:Climate change is the biggest challenge for humanity and international climate negotiation have been put in place to deal with the challenge. However, the international climate negotiations have not been able to achieve the global binding climate agreement to limit the warming under 2 0 C during this century. Previously the literature has covered the impacts, costs, benefits and the efficiency in terms of greenhouse gas emission reduction, sustainable development, climate justice and technology transfer. However less focus has been put on the institutional aspect of international climate negotiations. The aim of the paper is to describe the outcome of the international climate negotiations by institutional analysis and development framework. We conducted a literature review of the international climate negotiations including unilateralism, multilateralism, minilateralism and carbon markets. The results assist to clarify the role of climate governance approaches in tackling climate change.

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Section: Resultsmentioning

confidence: 99%

Section: Carbon Taxmentioning

confidence: 99%

Institutional Analysis of the Global Climate Change Regime: Literature Review of International Climate Negotiations

Havukainen¹

2017

International Conference on Climate Change

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“…Emission taxes guarantee a fixed financial incentive to reduce emissions" (Pizer 2001, 99). While carbon taxes are preferred by many economists and predate caps, they are less widely used and are today found mainly in the Scandinavian countries (since the early 1990s), the UK, and the Canadian province of British Columbia (Goulder and Schein 2013;Enevoldsen et al 2007). By contrast, cap-and-trade is currently in place or in the process of being set up in the EU, ten US states, the city of Tokyo, South Korea, the Canadian province of Quebec, several Chinese provinces, and internationally through the Kyoto Protocol.…”

Section: Carbon Pricing In Theory and Practicementioning

confidence: 99%

The bears are right: Why cap-and-trade yields greater emission reductions than expected, and what that means for climate policy

Tvinnereim

2014

Climatic Change

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Cap-and-trade, a regulatory instrument widely used to constrain greenhouse gas and other pollution, has recently been criticized for producing only small amounts of intended emission reductions. This paper looks at the empirical record of cap-and-trade since the beginning in 1995, and shows that emission targets have almost always been easier and cheaper to reach than expected. The five main reasons are generous targets, changes in economic output, fuel price movements, innovation, and complementary emission reduction policies. Overall, this failure to predict mitigation potentials may relate to a psychological "end of history bias," whereby policymakers, industry, and analysts think that less change will happen in the future than has demonstrably happened in the past. Consequently, more abatement is possible and at lower costs than generally thought, rendering the prices of emission permits hard to predict. For climate research, the findings imply that emission scenarios assuming ever-increasing pollution prices may benefit from integrating recent experience with cap-and-trade regulations. In policy terms, mechanisms such as floor prices need to be considered to guarantee emission reductions under uncertainty. IntroductionCap-and-trade programs have been introduced on four continents to reduce harmful greenhouse gas (GHG) emissions. While the compliance record is stellar as companies overwhelmingly follow the regulations, tradable permit prices have overall been lower than originally predicted (Laing et al. 2013). In market speech, "bulls" are those who expect higher prices, whereas "bears" are those who expect them to fall. In emission markets so far, the bears have been right. Electronic supplementary material The online version of this article

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“…One aspect of these discussions is an assessment of the tradable permits system [1]. Another aspect is the comparison between the two distinct alternatives of market instruments to curb emissions: the carbon tax and the cap-and-trade market [2] [3]. The first alternative has been almost absent from political platforms in North America.…”

Section: Introductionmentioning

confidence: 99%

“…Additionally, firms may prefer carbon markets. 3 One potential explanation is that quantity instruments allow industry to keep revenues within the industry rather than transferring them to the government through a price instrument. The research question that this paper addresses is why quantity systems are the outcome of the dynamic process of regulation between regulator and industry.…”

Section: Introductionmentioning

confidence: 99%

Strategic Choice of Market Instrument

Atallah¹

2017

TEL

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This paper proposes a model where both regulator and industry behave strategically to endogenously choose the optimal market instrument. The regulator payoff function includes political gains from investment in abatement and improvement in the provision of the environmental good in addition to the efficient choice of the instrument level. Whereas the industry's objective is to minimize abatement costs. Under plausible conditions, the model suggests that quantity instrument is favorable to the regulator. Also, industry with high cost of abatement has a better incentive to invest in clean technology. Regulator gains from increasing the provision of environmental good and from industry investing in abatement.

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Carbon Taxes vs. Cap and Trade: A Critical Review

Cited by 27 publications

References 42 publications

Institutional Analysis of the Global Climate Change Regime: Literature Review of International Climate Negotiations

Institutional Analysis of the Global Climate Change Regime: Literature Review of International Climate Negotiations

The bears are right: Why cap-and-trade yields greater emission reductions than expected, and what that means for climate policy

Strategic Choice of Market Instrument

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