Experience with Carbon Taxes and Greenhouse Gas Emissions Trading Systems

Haites, Erik; Duan, Maosheng; Gallagher, Kelly Sims; Mascher, Sharon; Narassimhan, Easwaran; Richards, Kenneth; Wakabayashi, Masayo

doi:10.2139/ssrn.3119241

Cited by 29 publications

(24 citation statements)

References 40 publications

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“…For instance, although regarded as one of the most cost-effective -i.e. cheap to implement and basically self-administering -means of mitigating climate change, CO 2 taxes are not nearly as prevalent as might be expected, implemented only in a handful of major jurisdictions around the world and met with resistance in several others (Haites et al, 2018;Sumner et al, 2011).…”

Section: Case Methods and Datamentioning

confidence: 99%

The impact of compensatory measures on public support for carbon taxation: an experimental study in Sweden

2018

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This study aims at better understanding how, and to what extent, perceptions of a policy instrument's distributional effects impact on policy support, focusing on the case of CO 2 taxes on petrol in Sweden. Through a large-scale (N = 5000) randomized survey experiment with a 2 × 3 factorial design, the extent to which perceptions of fairness determine attitudes to a suggested increase of the Swedish CO 2 tax is explored. Furthermore, the study considers whether these effects change with the level of the suggested tax increase, as well as whether negative sentiments can be alleviated by combining it with a compensatory measure in the shape of a simultaneous income tax cut financed by the revenues from the tax increase. The results show that a higher tax increase is both viewed as more unfair and enjoys weaker support. Furthermore, compensatory measures can be a powerful policy design tool to increase perceptions of the policy as fair, but the effect of compensation on policy support is conditioned by the individual's leftright ideological position. Whereas people self-identifying to the right react favourably to compensatory measures, people self-identifying to the left become less supportive of a tax increase when combined with a simultaneous cut in income taxes. Key policy insights. Perceptions of fairness are highly important for explaining public support for climate policy tools, specifically CO 2 taxes. . Compensatory measures can be a powerful policy design tool to increase perceptions of the policy as less unfair. . However, the effect of compensatory measures on policy support is conditioned by ideological position, and only successful among people to the ideological right. . In contexts dominated by right-wing ideals, a combination of a tax and a compensatory scheme may be a successful route forward towards increased climate policy support. . In left-oriented contexts the results imply that a CO 2 tax without compensation seems more likely to increase support.ARTICLE HISTORY

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Section: Case Methods and Datamentioning

confidence: 99%

The impact of compensatory measures on public support for carbon taxation: an experimental study in Sweden

2018

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“…The environmental effectiveness of each ETS is assessed based on the number of key emitting sectors covered in the jurisdiction's overall climate policy, the quantity of emissions included under a cap relative to the jurisdiction's ETS-covered emissions, the tightening of the cap over time and emissions reduction achieved (Haites et al, 2018). The coverage of key emitting sectors is assessed based on whether the ETS covers the major emitting sectors and a majority of the GHGs, or at least covers sectors that are not otherwise covered by alternative carbon mitigation policies.…”

Section: Environmental Effectivenessmentioning

confidence: 99%

“…Emissions reductions achieved by an ETS can be measured by the change in actual emissions covered by the ETS (Haites et al, 2018), but it is difficult to directly attribute these results to the ETS in jurisdictions with other complementary emissions-reduction policies. The endogenous and simultaneous nature of interaction between complementary policies such as feed-in tariffs or energy efficiency performance standards, and the ETS, makes it difficult to estimate the net impact of an ETS on overall emissions reduction (Hood, 2013).…”

Section: Emissions Reductions Achievedmentioning

confidence: 99%

“…The New Zealand and Chinese pilots perform relatively poorly with significant exemptions of coverage to EITE sectors and no policies aimed at tightening the emissions cap over time. As best practice, an ETS covering a substantial portion of a jurisdiction's point-source emissions with scheduled timetables for tightening of emissions caps over time is ideal (Haites et al, 2018).…”

Section: Stakeholder Engagementmentioning

confidence: 99%

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Carbon pricing in practice: a review of existing emissions trading systems

et al. 2018

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This article analyses the implementation of emissions trading systems (ETSs) in eight jurisdictions: the EU, Switzerland, the Regional Greenhouse Gas Initiative (RGGI) and California in the US, Québec in Canada, New Zealand, the Republic of Korea and pilot schemes in China. The article clarifies what is working, what isn't and why, when it comes to the practice of implementing an ETS. The eight ETSs are evaluated against five main criteria: environmental effectiveness, economic efficiency, market management, revenue management and stakeholder engagement. Within each of these categories, ETS attributes − including abatement cost, stringency of the cap, improved allocation practices over time and the trajectory of price stability − are assessed for each system. Institutional learning, administrative prudence, appropriate carbon revenue management and stakeholder engagement are identified as key ingredients for successful ETS regimes. Recent implementation of ETSs in regions including California, Québec and South Korea indicates significant institutional learning from prior systems, especially the EU ETS, with these regions implementing more robust administrative and regulatory structures suitable for handling unique national and sub-national opportunities and constraints. The analysis also shows that there is potential for a 'double dividend' in emissions reductions even with a modest carbon price, provided the cap tightens over time and a portion of the auctioned revenues are reinvested in other emissions-reduction activities. Knowledge gaps exist in understanding the interaction of pricing instruments with other climate policy instruments and how governments manage these policies to achieve optimum emissions reductions with lower administrative costs. Key policy insights. Countries are learning from each other on ETS implementation.. Administrative and regulatory structures of ETS jurisdictions appear to evolve and become more robust in every ETS analysed.. A 'double dividend' for emissions reductions may also exist in cases where mitigation occurs as a result of the ETS policy and when auction revenues are reinvested in other emissions-reduction activities.

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“…The success of an ETS is not only based on the emissions reduction, but also price volatility, revenues raised, and administrative issues [33]. Reference [5] assessed 17 ETSs in 34 national and 21 subnational jurisdictions including the EU ETS.…”

Section: Literature Reviewmentioning

confidence: 99%

The Road to a Downstream Emissions Trading System: Designing a Scheme Combining Motorist and Government Participation

Al-Guthmy

Yan

2019

Journal of Energy

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As downstream road transport has not been fully integrated into any emissions trading scheme, this paper proposes and evaluates the possibility of one by addressing the main barriers hindering its development. Based on this, a scheme which separates the “Cap” and “Trade” participation to motorists and local governments, respectively, is presented through a systematic review. We investigate how the scheme addresses the problems of cost, administrative burden, and fuel allowance allocation as they are all key factors that need equal consideration. We also justify the model’s unique structure and characteristics against the world’s largest scheme, the European Union Emissions Trading System (EU ETS), to ensure they cater to the three aforementioned issues barring its viability. It is concluded that, by amending specific policy attributes of a road-based emissions trading scheme significantly, it could be more practical both economically and administratively. Also, leveraging on existing institutional arrangements would allow for an economically feasible environment for the administration and management of such a scheme.

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Experience with Carbon Taxes and Greenhouse Gas Emissions Trading Systems

Cited by 29 publications

References 40 publications

The impact of compensatory measures on public support for carbon taxation: an experimental study in Sweden

The impact of compensatory measures on public support for carbon taxation: an experimental study in Sweden

Carbon pricing in practice: a review of existing emissions trading systems

The Road to a Downstream Emissions Trading System: Designing a Scheme Combining Motorist and Government Participation

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