The Initial Incidence of a Carbon Tax across Income Groups. 2016/01/12
Williams, R., J. Carbonne, H. Gordon, D. Burtraw and R. Morgenstern.
Carbon taxes efficiently reduce greenhouse gas emissions but are criticized as regressive. This paper links dynamic overlapping-generation and microsimulation models of the United States to estimate the initial incidence. We find that while carbon taxes are regressive, the incidence depends much more on how carbon tax revenue is used. Recycling revenues to cut capital taxes is efficient but exacerbates regressivity. Lump-sum rebates are less efficient but much more progressive, benefiting the three lower income quintiles even when ignoring environmental benefits. A labor tax swap represents an intermediate option, more progressive than a capital tax swap and more efficient than a rebate
Beyond IPCC: Research for Paris 2015 and Beyond 2016/01/12
The Climate conference in Paris December 2015 is described as “last chance” or “5 to twelve” but in the climate arena there is a risk that we have over-utilized the doomsday vocabulary already in the run-up to Copenhagen, 2009 the better part of a decade ago. For those who have worked on climate issues for several decades it poses a special challenge to calibrate language.Words like “immediate” need careful explanation. Think of a super tanker with so much inertia that it takes a full hour to stop in an emergency—and in our case it is not an hour but decades—damage is probably quite gradual and yet there is literally no time to delay.Activists feel that we have to use every opportunity to further climate change policy because not much has been achieved to date and December 2015 does represent a special opportunity but clearly it is an illusion that any one particular meeting will cut the Gordian knot and result in a full international treaty with appropriate policies for all the countries of the world. The UNFCCC has yearly conferences of the parties (COP) but the expectations have not been this high since Copenhagen which was later described as a big failure. Politicians are keen to avoid a repeat and so expectations have been lowered. We are no longer seeking a grand agreement but a set of “Intended, Nationally Determined Contributions”, INDCs. Both the qualifiers “intended” and “nationally determined” raise issues related to the design of a treaty intended to provide a global public good.Normally we need to make sure that commitments are verifiable, controllable, add up to a sufficient aggregate goal and that there are incentives to deliver on the commitment. The Kyoto Protocol has been severely criticized—not least in the USA. American observers have pointed at the asymmetry created by requiring virtually nothing of large and growing emitters such as China. This interpretation of the Rio principle of “common but differentiated responsibilities” has effectively made it impossible to pass any effective
Global wood-based energy usage, associated greenhouse gas emissions, and policy options to mitigate emissions 2016/01/12
Sekar, S., Siikamäki, J.,
Forests continue to provide a key source of energy throughout the world. Many developing countries, especially those with lowest incomes, rely on wood energy for cooking, heating, and power. Several developed countries increasingly use wood for renewable energy. When sustainably managed, forests can help address both energy demand and greenhouse gas (GHG) mitigation. Our broad purpose with this study is twofold; first, formulate a more comprehensive understanding of wood energy usage and its GHG emissions, and second, consider wood energy as part of the broader energy and climate policy portfolio around the world, including developing and developed countries. Our geographic scope is global, but we generate our estimates at the country-level. We first explain alternative sources of wood energy and technologies to utilize them. We then use data primarily from FAO and International Energy Agency to estimate current and future uses of wood energy around the world. Thereafter, we discuss wood energy GHG accounting, and use recent emissions intensity estimates1 to assess past, current, and future emissions from wood energy. Next, we examine options for mitigating emissions from wood energy, including technological improvements, substitution of wood for fossil fuels, and improving forest management. Then, we study wood energy in the national, regional, and international climate policy agreements, including past CDM/JI projects associated with wood fuels. Finally, we synthesize our findings and discuss the potential of wood energy to support wider energy and climate policy goals. We find considerable heterogeneity in the role of wood energy in the broader energy portfolio. Asia and Africa are the world’s largest producers of wood fuel, and some countries depend on wood for over 80% of residential energy use. In high-income countries, wood energy is commonly produced relatively efficiently, thus, less GHG intensively. In Asia, total wood fuel usage is declining, whereas Africa continues an increasing trend. Globally, GHG emissions from wood fuel are about 2% of all emissions. In some countries, especially in East Africa, wood fuel emissions constitute a large share of emissions. Our results show where total and per-capita emissions are concentrated and where the greatest potential for emissions mitigation exists. Our key contribution is to comprehensively and globally assess wood fuel in the context of broader energy portfolio and climate policy. We provide novel estimates of past and future emissions associated with wood energy, including their geographic variation. Our findings help inform forest, energy, and climate policies throughout the world. Our focus on GHG emissions is particularly relevant prior to the Paris COP in December. Our assessments of developing countries are pertinent, as increased developing country participation is high on the agenda in international climate policy. Improving sustainability of wood energy provides developing countries options to address emissions; international climate policy offers developed countries instruments to support such efforts. Finally, more sustainable use of forests for energy has important implications on their capacity to support other benefits to people, including wood and non-wood ecosystem services
Inclusion of Consumption of Carbon Intensive Commodities in Carbon Pricing Mechanisms 2016/01/12
Neuhoff K, Acworth W, Barrett J, Owen A, Fischer C, Munnings C, Ismer R, Kim Y G, Pauliuk S, Wood R, Sartor O, Sterner T, Xiliang Z, Zetterberg L, Roth S
Climate protection is a global challenge that all countries have a common but differentiated responsibility to address. However, not all governments are willing to commit to targets of equal stringency. Moreover, countries may have different views on the choice of policy mix. Some countries may put a stronger emphasis on the carbon price and see a higher carbon price in the policy mix whereas other countries may make more use of other regulatory instruments. Carbon prices may thus continue to differ over longer time horizons. Without additional measures, this difference in the carbon price risks a shift in production of carbon intensive materials to regions with lower carbon prices, so called carbon leakage.
Are renewable energy subsidies in need of reform? 2016/01/12
Fischer, C., M. Greaker and K.E. Rosendahl
A chapter in a forthcoming MIT Press book volume on energy subsidies, edited by Jon Strand. Drafted and accepted
Options for avoiding carbon leakage 2016/01/12
Contribution to the book Towards a Workable and Effective Climate Regime . Scott Barrett, Carlo Carraro, Jaime de Melo, Editors.
Carbon Pricing: Transaction Costs of Emissions Trading vs. Carbon Taxes 2016/01/12
Coria, J. and Jūratė Jaraitė
Working Papers in Economics no 609, Department of Economics, University of Gothenburg.