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Environmentally Responsible Energy Pricing

Abstract:
This paper assesses the value of the non-global warming externalities associated with energy use. The estimates of the full social cost energy prices based on this "no regrets" approach imply environmental costs that often greatly exceed current tax amounts. The midpoint estimates suggest that the price of coaI is most out of line with its efficient level. Natural gas is currently overtaxed, and gasoline is appropriately taxed. There is also a substantial range of uncertainty embodied in the no regrets estimates.

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Energy Specializations: Petroleum – Markets and Prices for Crude Oil and Products; Natural Gas – Markets and Prices; Energy and the Environment – Policy and Regulation

JEL Codes: Q40: Energy: General, Q41: Energy: Demand and Supply; Prices, Q53: Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling, Q52: Pollution Control Adoption and Costs; Distributional Effects; Employment Effects, Q35: Hydrocarbon Resources

Keywords: Environmental protection, Energy pricing, Taxes, Climate change, Externalities

DOI: 10.5547/ISSN0195-6574-EJ-Vol15-No2-2

Published in Volume15, Number 2 of the bi-monthly journal of the IAEE's Energy Economics Education Foundation.

 

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