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Are Differentiated Carbon Taxes Inefficient? A General Equilibrium Analysis

Brita Bye and Karine Nyborg

Year: 2003
Volume: Volume24
Number: Number 2
DOI: 10.5547/ISSN0195-6574-EJ-Vol24-No2-4
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Abstract:
Revenue-raising environmental policy instruments, such as carbon taxes, tend to be politically controversial. In practice, carbon taxes are often differentiated between polluters, implying unequal marginal abatement costs. Grandfathered tradeable permits seem less controversial; this instrument yields equal marginal abatement costs, but does not raise revenue. We compare a system of differentiated carbon taxes, exemplified by the current Norwegian carbon tax regime, to uniform carbon taxation and grandfathered tradeable emission permits. In this particular case, differentiated taxes are welfare superior to grandfathered permits. Nevertheless, uniform carbon taxes outperform both.



Searching for Triple Dividends in South Africa: Fighting CO2 Pollution and Poverty while Promoting Growth

Jan van Heerden , Reyer Gerlagh, James Blignaut, Mark Horridge, Sebastiaan Hess, Ramos Mabugu and Margaret Mabugu

Year: 2006
Volume: Volume 27
Number: Number 2
DOI: 10.5547/ISSN0195-6574-EJ-Vol27-No2-7
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Abstract:
A CGE model of South Africa is used to find the potential for a double or triple dividend if the revenues raised from an energy-related environmental tax are recycled to households and industry through lowering existing taxes. Four environmental taxes and three revenue-recycling schemes are compared. The environmental taxes are (i) a tax on greenhouse gas emissions, (ii) a fuel tax, (iii) a tax on electricity use, and (iv) an energy tax. The four taxes are constructed such that they have a comparable effect on emissions. The revenue is recycled through either (i) a direct tax break on both labour and capital, (ii) an indirect tax break to all households, or (iii) a reduction in the price of food. A triple dividend is found � decreasing emissions, increasing GDP, and decreasing poverty � when any one of the environmental taxes is recycled through a reduction in food prices.



Soft Fiscal Policies for a Polluting Monopolist

Manel Antelo and Maria L. Loureiro

Year: 2009
Volume: Volume 30
Number: Special Issue #2
DOI: 10.5547/ISSN0195-6574-EJ-Vol30-NoSI2-8
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Abstract:
This paper examines optimal environmental taxation in an incomplete-information two-period model in which a monopolistic firm produces and pollutes. The firm is privately informed about its costs of production and abatement, and the regulator � which can only infer the firm�s technology after observing the output from the period 1 � has the chance to set environmental taxes in period 1 to correct the firm�s opportunistic behavior. The regulator is aware that the polluter may strategically choose a given level of production (and pollution) in period 1 in order to manipulate the regulator�s beliefs concerning its technology and, consequently, adjusts the tax paid in period 2. We show that if the regulator reduces pollution taxes in the first period below the level under symmetric information, then the clean firm will signal its type by further reducing its output. Having gathered information from the firm with respect to its technology and emissions, the regulator raises pollution taxes in the second period. In the light of the present results, soft fiscal policies based on initial low-taxes, which are later increased, may be used in the presence of asymmetric information to provide incentives for a firm to reveal its true level of emissions and mitigate opportunistic behavior.



Firm-level Estimates of Fuel Substitution: An Application to Carbon Pricing

Marie Hyland and Stefanie Haller

Year: 2018
Volume: Volume 39
Number: Number 6
DOI: 10.5547/01956574.39.6.mhyl
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Abstract:
We estimate partial and total own and cross price elasticities between electricity, gas and oil, using firm-level data. We find that, based on the partial elasticity measure, electricity is the least-responsive fuel to changes in its own price and in the price of other fuels. The total elasticity measure, which adjusts the partial elasticity for changes in aggregate energy demand induced by individual fuel price changes, reveals that the demand for electricity is much more price responsive than the partial elasticity suggests. Our results illustrate the importance of accounting for the feedback effect between interfactor and interfuel elasticities when considering the effectiveness of environmental taxation. We use the estimated elasticities to simulate the impact of a �15/tCO2 carbon tax on average energy-related CO2 emissions. The carbon tax results in a small reduction in CO2 emissions from oil and gas use, but this reduction is partially offset by an increase in emissions due to increased electricity consumption by some firms.



Efficient Combination of Taxes on Fuel and Vehicles

Geir H. M. Bjertnæs

Year: 2019
Volume: Volume 40
Number: The New Era of Energy Transition
DOI: 10.5547/01956574.40.SI1.gbje
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Abstract:
A tax on fuel combined with tax exemptions or subsidies for fuel-efficient vehicles is implemented in many countries to reduce greenhouse gas emissions and other negative externalities from road traffic. This study, however, shows that a tax on fuel should be combined with heavier taxation of fuel-efficient vehicles to curb externalities from road traffic. The tax on fuel is implemented in order to curb externalities linked to both consumption of fuel and road use. A heavier tax on fuel-efficient vehicles prevent motorists from avoiding the road user charge on fuel by purchasing fuel-efficient vehicles.





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