Leakage in regional environmental policy: The case of the regional greenhouse gas initiative

Fell, Harrison; Maniloff, Peter

doi:10.1016/j.jeem.2017.10.007

Cited by 95 publications

(37 citation statements)

References 19 publications

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“…We further note that Fell and Maniloff (2018) estimate substantial positive external carbon leakage (L = 0.51) from RGGI to non-RGGI states. The Shawhan et al (2018) and Fell and Maniloff (2018) studies underscore that external and internal leakage are distinct phenomena that can even have different signs.…”

Section: Regional Greenhouse Gas Initiativementioning

confidence: 65%

Overlapping Climate Policies

Perino¹,

Ritz²,

Benthem³

2019

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We present an integrated framework to understand the emissions impact of unilateral overlapping policies within a carbon-pricing system. \Internal carbon leak-age" captures emissions displacement within the system (e.g., due to greater product imports from a neighbouring country). The waterbed effect captures the policy's interaction with the system's overall emissions cap. Current market rules in the reformed EU ETS, California's carbon market and RGGI feature \punctured" waterbeds that allow overlapping policies to affect aggregate emissions. We present simple formulae to estimate internal carbon leakage for different types of policy such as a carbon price floor (perhaps with a border tax adjustment), an energy efficiency program, and renewables support. The sign and magnitude of the climate benefit from an overlapping policy varies widely depending on its design, location and timing. Punctured waterbeds raise the stakes: well-designed overlapping policies can be much more climate-effective but others now backfire. Cambridge Working Papers in Economics Faculty of Economics www.eprg.group.cam.ac.uk

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Section: Regional Greenhouse Gas Initiativementioning

confidence: 65%

Overlapping Climate Policies

Perino¹,

Ritz²,

Benthem³

2019

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“…35 The ETS is estimated to be responsible for about half of the emission reductions by fossil-fired generating plants in RGGI states between 2009 and 2012 (Murray & Maniloff, 2015). Part of the reduction may have been offset by higher emissions in neighbouring states (Fell & Maniloff, 2018).…”

Section: The Performance Of Ghg Etssmentioning

confidence: 99%

Carbon taxes and greenhouse gas emissions trading systems: what have we learned?

Haites

2018

Climate Policy

254

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Systematic evidence relating to the performance of carbon pricingcarbon taxes and greenhouse gas (GHG) emissions trading systems (ETSs)is sparse. In 2015, 17 ETSs were operational in 55 jurisdictions while 18 jurisdictions collected a carbon tax. The papers in this special thematic section review the performance of many of these instruments over the 2005-2015 period. The performance of existing carbon taxes and GHG ETSs can help policy makers make informed choices about whether to introduce these instruments and to improve their design. The purpose of carbon pricing instruments is to reduce GHG emissions cost effectively. Assessing their performance is difficult because emissions are also affected by other policies and exogenous factors such as economic conditions. Carbon taxes in Europe prior to 2008 and in British Columbia reduced emissions from business-as-usual but actual emissions continued to rise. Since 2008 emissions subject to European carbon taxes have declined, but in most countries, other mitigation policies have probably contributed more to the reductions than the carbon taxes. Emissions subject to ETSs, with the exception of four systems without emissions caps, have declined. The ETSs contributed to the emissions reductions, but their share of the overall reduction is not known. Most tax rates are low relative to levels thought to be needed to achieve climate change objectives. Few jurisdictions regularly adjust their tax rates. All ETSs have accumulated surplus allowances and implemented measures to reduce these surpluses. The largest ETSs now specify annual reductions in their emissions cap several years into the future. Emissions trading system allowance prices are generally lower than the tax rates.Key policy insights . Theoretical discussions usually portray carbon taxes and GHG ETSs as alternatives.In practice, a jurisdiction often implements both instruments to address emissions by different sources. . Designs of ETSs have evolved based on experience shared bilaterally and via dedicated institutions. . Carbon tax designs, in contrast, have hardly evolved and there are no institutions dedicated to sharing experience. . Every jurisdiction with an ETS and/or carbon tax also has other policies that affect its GHG emissions. ARTICLE HISTORYCarbon pricing can be implemented using either of two instrumentsa carbon tax or a GHG emissions trading system (ETS). With a tax, the government sets the tax rate and specifies the sources subject to the tax. The emission reduction achieved depends upon the response of the affected sources to the imposition of the tax. With an ETS the government sets a limit on GHG emissions by specified sources and distributes allowances approximately equal to the limit. 2 Allowances are tradable. Each source must surrender allowances equal to its actual emissions to the government. Emissions cannot exceed the limit, but the compliance cost depends on the market price of allowances.There is an extensive literature on the relative merits of these two instruments (e.g. Partnersh...

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“…Outside the EU, Aldy and Pizer (2015 [26]) investigate trade effects in the USA from fuel price fluctuations, concluding that a hypothetical carbon price of USD 15/ton CO2 would lead to a 0.8% increase in imports in energy-intensive sectors. 9 Foreign Direct Investment (FDI) measures the flow of capital across national borders and reflects the expectations of firms about the profitability of foreign versus domestic investments. On the one hand, an increase in outward FDI can be a proxy for the extent to which carbon pricing leads to "offshoring".…”

Section: International Outcomes: Net Imports and Foreign Direct Invesmentioning

confidence: 99%