The Impact of Carbon Taxation and Revenue Recycling on U.S. Industries

Macaluso, Nick; Tuladhar, Sugandha D.; Woollacott, Jared; McFarland, James; Creason, Jared; Cole, Jefferson

doi:10.1142/s2010007818400055

Cited by 20 publications

(9 citation statements)

References 15 publications

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“…In contrast, The ITC will decrease the EPE. This finding complies with Macaluso, Tuladhar et al (2018) who showed the carbon tax would induce the substitutions toward less carbon-intensive energy sources and production technologies. Hence, with less resources allocated, the production efficiency of the energy sectors will decrease.…”

Section: Discussionsupporting

confidence: 90%

The Technical Impacts of the Carbon Tax in China

Chen

2021

Preprint

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Despite the significant impacts of technology on the socioeconomic effects of climate policies, many previous researchers neglected the induced technical impacts and thus resulted in biased evaluations of climate policies. Hence, it is important that the induced technology should be endogenized in the policy evaluation framework. In this paper, I attempt to use a Computable General Equilibrium (CGE) model to quantify the technical impacts of the Chinese carbon tax. The technical impacts are denoted by the induced technological change (ITC), which is a function of the energy-use efficiency (EUE), energy-production efficiency (EPE), and nonenergy-production efficiency (ENE). The carbon tax will increase the energy cost share because the of the internalisation of the abatement costs. This paper empirically shows that the carbon tax will decrease the energy cost share and production efficiency but increase the energy use and nonenergy production efficiency. Overall, the carbon tax will promote the technological development, compared to the baseline scenario. In addition to the policy effects of the tax, the ITC will decrease the energy use and production efficiency but increase the nonenergy production efficiency. The ITC will increase the RGDP, decrease the household welfare, and increase the average social cost of carbon (ASCC). To summarise, despite that the carbon tax will decrease the welfare at the country and household level, the ITC of the carbon tax will increase the welfare at the country level but decrease the welfare at the household level. Under the ITC impacts, the emission abatement will become costlier.

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Section: Discussionsupporting

confidence: 90%

The Technical Impacts of the Carbon Tax in China

Chen

2021

Preprint

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“…In contrast, The ITC will decrease the EPE. This finding complies with Macaluso, Tuladhar [33] who showed the carbon tax would induce the substitutions toward less carbon-intensive energy sources and production technologies. Hence, with less resources allocated, the production efficiency of the energy sectors will decrease.…”

Section: Discussionsupporting

confidence: 90%

The technical impacts of the carbon tax in China

Chen

2021

Discov Sustain

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Despite the significant impacts of technology on the socioeconomic effects of climate policies, many previous researchers neglected the induced technical impacts and thus resulted in biased evaluations of climate policies. Hence, it is important that the induced technology should be endogenized in the policy evaluation framework. The purpose of this paper is the quantification of the technical impacts of the Chinese carbon tax using a Computable General Equilibrium (CGE) model. The technical impacts are denoted by the induced technological change (ITC), which is a function of the energy-use efficiency (EUE), energy-production efficiency (EPE), and nonenergy-production efficiency (ENE). The carbon tax will increase the energy cost share because of the internalisation of the abatement costs. This paper empirically shows that the carbon tax will decrease the energy cost share and production efficiency but increase the energy use and nonenergy production efficiency. Under the carbon tax, the ITC will decrease the energy use and production efficiency but increase the nonenergy production efficiency. The ITC will increase the RGDP, decrease the household welfare, and increase the average social cost of carbon (ASCC). This finding implies that the ITC of the carbon tax is biased towards the technical progress of nonenergy sectors; the emission abatement will become costlier under the ITC impacts. Although the quantification method of the technical impacts was from an existing published paper, the CGE analysis of the ITC impacts of the carbon tax in China is original in this paper.

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“…Results from ADAGE-US and other models in this study (Macaluso et al, 2018) show that emissions are most sensitive to the size of the carbon tax applied and relatively insensitive to how the revenue is recycled. Figure 2 presents baseline levels and percent changes in GHGs for four scenarios: lump-sum and lump-sum with capital tax rebates at $25 and $50, both growing at 5%.…”

Section: Emissionsmentioning

confidence: 73%

The Economic Costs and Co-Benefits of Carbon Taxation: A General Equilibrium Assessment

Woollacott

2018

Clim. Change Econ.

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I examine the general equilibrium costs of climate policies that levy taxes on carbon dioxide (CO2) emissions in the United States and return the revenue in the form of lump-sum rebates and tax relief over the years 2020 to 2040 using the US regional version of the Applied Dynamic Analysis of the Global Economy (ADAGE-US) forward-looking dynamic Computable General Equilibrium (CGE) model. I approximate the value of co-benefits to these policies that arise from concomitant reductions in nongreenhouse gas (GHG) emissions using the CO-Benefits Risk Assessment model (COBRA). There is significant heterogeneity in costs and co-benefits from climate policies across space and income. Policy costs are generally less than 0[Formula: see text]5% in equivalent variation terms (between a few tens of dollars and several hundred per household, depending on the income quintile), can be fully neutralized for the lowest- quintile households at a modest increase in overall policy cost, and tend to be lower for upper-quintile households in coastal regions. The policy co-benefit values range widely across regions, approximately $150–1250 per household, exceeding the gross cost of the policy for many households, particularly those in the Midwest. Last, I identify a marginal welfare cost of $58[Formula: see text]tCO2 and a marginal co-benefit of $31[Formula: see text]tCO2 at a national level over all households, which implies a required climate benefit of $27[Formula: see text]tCO2 or less to justify the level of abatement achieved by a $25[Formula: see text]tCO2 tax growing at 5%.

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The Impact of Carbon Taxation and Revenue Recycling on U.S. Industries

Cited by 20 publications

References 15 publications

The Technical Impacts of the Carbon Tax in China

The Technical Impacts of the Carbon Tax in China

The technical impacts of the carbon tax in China

The Economic Costs and Co-Benefits of Carbon Taxation: A General Equilibrium Assessment

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