UNO – SEI
https://www.env-econ.net/2007/04/co2_tax_vs_capa.html
Meglio la carbon tax o il cap and trade? Una carbon tax ha il vantaggio che i ricavi possono essere usati per abbassare altre tasse e inoltre evita i problemi causati dalla volatilità dei prezzi in un sistema di cap and trade. I benefici netti sarebbero superiori per la carbon tax, secondo uno studio.
Le ragioni contro la carbon tax sono: i tassati preferiscono avere la possibilità di scambiare i permessi di inquinare, votare una nuova tassa può essere suicida, i ricavi possono essere sprecati in spesa pubblica improduttiva.
https://www.env-econ.net/2007/06/carbon_trading_.html
I paesi in via di sviluppo hanno un incentivo a scambiare l’inquinamento, non essendo sicuri di ricevere i ricavi delle carbon tax.
Carbon trading with developing countries
From the Energy Roundup:
In an agreement announced today, the United Nations Development Program will help developing countries dream up projects to clean up the environment and curb carbon emissions and will certify that those projects are worthy of carbon credits under the Kyoto protocol. Then Dutch-Belgian bank Fortis will buy those credits from the developing countries — giving the countries cash for investment and development — and sell them on the open market.
In a press release, the UNDP said the carbon-trading system established by the Kyoto protocol hadn’t been as helpful for carbon trading as expected, in part because its reach has been geographically limited, mainly to Asia and Latin America. Today’s announced deal, the UNDP hopes, will change that.
Is this one reason to favor carbon cap-and-trade? Developing countries have an incentive to offset carbon. With a carbon tax, the tax revenue would need to be recycled to developing countries without a market price to guide the transaction. Of course, I’m famously agnostic on the matter.
And maybe the UNDP will do a better job of certifying offset projects relative to the Kyoto Protocol program. Check out this story at Grist.
https://blogs.wsj.com/environmentalcapital/2007/04/09/carbon-tax-vs-cap-and-trade/
It seems inevitable that, some day, Congress will pass legislation meant to cut greenhouse-gas emissions. And it seems likely that said legislation will involve a “cap-and-trade” system, putting a cap on emissions and creating a system of carbon permissions that can be traded on the open market.
But can such a system be effective? The Guardian reported last week that Europe’s cap-and-trade system is “manifestly not working as planned.” Today, the Washington Post was somewhat kinder, but still said the system had produced “a bureaucratic morass with a host of unexpected and costly side effects and a much smaller effect on carbon emissions than planned.”
Last week, former Council of Economic Advisers chief Greg Mankiw, who has long favored a much-higher tax on gasoline — suggested that investment banks and energy companies would benefit most from a cap-and-trade system. (Hat Tip: Climateer Investing.) He is one of many high-profile members of a seemingly unlikely club that includes liberals such as Al Gore and conservatives such as David Frum, arguing in favor of a carbon tax.
But a massive carbon tax strikes many as politically impossible, which is why some analysts are calling for a cap-and-trade system as the lesser of two evils. “Am I convinced to get behind a carbon tax over cap-and-trade? Not quite yet, I prefer a carbon tax over cap-and-trade, but cap-and-trade over nothing,” Appalachian State economics professor John Whitehead wrote on the Environmental Economics blog last week. “I think the latter choice is the one we are most likely facing these days.”
https://www.env-econ.net/2008/12/friedman-on-the.html
Una tassa sul gas è preferibile a un price floor perché il price floor crea carenze di gas e il governo non riceve entrate. La tassa sul gas riduce un’esternalità e non crea scarsità di gas. Ambedue le policy creano una deadweight loss, cioè un’inefficienza, ma la perdita nel secondo caso è compensata dall’eliminazione dell’esternalità.
Comunque non ci sono politiche win win. Ogni politica crea benefici e costi, vincitori e perdenti. Una gas tax crea più benefici che costi o benefici maggiori dei costi
https://www.env-econ.net/2008/09/a-carbon-tax-as.html
Dovendo tassare qualcosa, bisognerebbe tassare il carbonio, ma questo non stimola l’economia: ogni nuovo lavoro verde nel lungo termine sostituisce un lavoro nero perso nel breve termine. Ridurre il deficit di bilancio può evitare una crisi futura (la crescita di social security e medicare con un grande deficit di bilancio potrebbe allargarlo in futuro e scoraggiare l’acquisto di obbligazioni da parte degli investitori stranieri, quindi far salire i tassi d’interesse).
https://www.env-econ.net/2006/05/carbon_prices_i.html
Sembra che le aziende di utility abbiano sovrastimato il loro diritto di inquinare, allo stesso modo in cui le persone sottostimano il proprio reddito al momento di doverci pagare le tasse. Non è una sorpresa.
Qual è la soluzione? L’Unione Europea dovrebbe vendere un numero ridotto di permessi ogni anno finché arrivano al livello desiderato. Inoltre dovrebbe estendere il periodo di tempo della regolamentazione per ridurre l’incertezza sul valore futuro dei permessi.
Una graduale introduzione di una carbon tax farà fuori probabilmente dei lavori legati alle fonti fossili ma avrà effetti positivi in altri settori dell’energia.
Se le entrate della carbon tax sono usate per ridurre il debito pubblico e quindi ridurre le tasse sulle generazioni future potrebbe essre ragionevole non adottare il principio della neutralità dei ricavi.
Gli Stati Uniti hanno una delle più basse tasse sulle emissioni di anidride carbonica. Occorre verificare questa affermazione.
Se gli Stati Uniti perseguissero una seria politica climatica, sarebbe più semplice incoraggiare la Cina e l’India a contribuire al bene pubblico. Una riduzione delle emissioni da parte degli Stati Uniti potrebbe aiutare a fermare o ritardare gli effetti del cambiamento climatico. Invece, dato il ruolo leader degli Stati Uniti nell’economia mondiale, un aumento delle emissioni statunitensi impedirà che il calmbiamento climatico possa essere fermato o ritardato.
Le prove che sugli effetti del cambiamento climatico sono recenti, ma anche se siamo scettici, lui ci aspetta in fondo alla discesa.
SETTE – QUATTORDICI
https://www.env-econ.net/2015/03/the-ways-and-means-of-paul-ryan-wsj.html
Il cap and trade è uno dei modi più efficenti di adottare una politica di contrasto ai cambiamenti climatici.
Una tassa sulle emissioni è un altro modo efficiente per ottenere lo stesso risultato.
Una carbon tax è neutrale se si usano le entrate per ridurre altre tasse, come quelle sul lavoro. Così si tassa una cosa cattiva e si riducono le tasse su una cosa buona. In alternativa le entrate possono essere redistribuite direttamente ai cittadini (carbon dividend). Oppure possono essere usate dal governo per ridurre il debito (e quindi le tasse future).
Una politica tassa e spendi invece è una tassa le cui entrate vengono destinate a più spese pubbliche. Non è questo il caso della revenue neutral carbon tax
https://www.env-econ.net/2007/06/why_i_think_the.html
Sia le tasse sulle emissioni che il cap and trade possono:
1 permettere di raggiungere il livello ottimale di emissioni al minor costo per la società
2 fornire incentivi alle imprese per innovare e abbattere ulteriormente i costi.
3,4,5 altro
https://www.env-econ.net/2013/02/the-case-for-a-higher-gasoline-tax-nytimescom.html
Una regolamentazione command and control (fissare degli standard) è meno flessibile e più costosa rispetto alla riduzione del consumo di energia attraverso una tassa.
https://www.env-econ.net/2013/08/a-republican-case-for-climate-action-nytimescom.html
Possiamo avere un’economia forte e un clima in cui si può vivere. Dobbiamo continuare a sforzarci per ridurre il climate change e l’inquinamento. La sola incertezza è sull’entità dei danni e quando accadranno. Non c’è tempo da perdere. Le soluzioni supportate, come gli investimenti in energia pulita, hanno già funzionato.
https://www.env-econ.net/2011/04/carbon-tax.html
Una tassa troppo bassa non avrà effetti-
https://www.env-econ.net/2008/01/carbon-trading.html
Per funzionare il carbon trading deve essere globale, altrimenti gli inquinatori si spostano.
https://www.env-econ.net/2009/07/all-environmental-economists-dont-strongly-favor-a-carbon-tax.html
Gli economisti ambientali: 111 in favore della carbon tax, 71 del cap and trade
Se il governo mette all’asta il 100% dei permessi non c’è differenza tra cap and trade e carbon tax. La differenza c’è se si considerano i ricavi. L’incertezza derivante dai ricavi raccolti attraverso una tassa è diversa dall’ammontare dei ricavi raccolti attraverso un’asta sui permessi.
QUINDICI
Se le utilites devono sostenere dei costi alti per ridurre le emissioni potrebbero comprare il diritto di inquinare da coloro i quali sono in grado di tagliarle a costi inferiori. In questo modo ridurre l’inquinamento globale sarebbe più economico. Questa idea è stata messa in pratica con successo negli Stati Uniti per ridurre il piombo nella benzina ai tempi di Reagan e per ridurre le emissioni di anidride solforosa, responsabile delle piogge acide. Tra il 1990, anno di approvazione del clean air act, e il 1996, tali emissioni negli USA si sono ridotte di un quinto. Il mercato dei diritti di inquinamento ha permesso di tagliare il costo della riduzione delle emissioni di almeno la metà, facendo risparmiare alle imprese del settore e ai loro clienti miliardi di dollari.
Affidarsi al mercato costa meno che stabilire degli standard. Secondo uno studio comparativo effettuato da Sebastian Rausch, del Center for Economic Research dell’ETH University in Zurich e da Valerie J. Karplus del Massachusetts Institute of Technology, fissare degli standard come il federal renewable portfolio standard, il clean energy standard, i fuel economy standards e simili porta a una riduzione delle emissioni di solo un quarto rispetto all’adozione di una policy cap and trade a parità di costi. Quindi la fissazione degli standard è un policy molto meno efficiente (molto più costosa).
Robert Stavins, capo del programma di economia ambientale di Harvard: “Usare degli standard regolatori per limitare le emissioni di gas serra prodotte da molti milioni di famiglie, industrie, fattorie, automobili, camion ecc, con costi di abbattimento molto diversi per ciascuna fonte, è un obiettivo complesso e implausibile. L’unico modo per riuscire nell’intento di limitare le emissioni è quello di mandare le informazioni attraverso i mercati. Stabilire un prezzo per il carbonio darebbe a tutti l’incentivo a ridurre le emissioni al costo più basso possibile. Sono stati fatti pochi progressi in questa direzione, però. Mentre il carbonio è spesso prezzato in modo implicito attraverso tasse varie sull’energia, il prezzo è ancora quasi sempre troppo basso per incoraggiare sostanziali riduzioni delle emissioni di CO2”.
SEDICI
Milton Friedman: Il governo può fare qualcosa contro l’inquinamento? Sì. Ci sono delle ragioni affinché il governo intervenga quando due persone influenzano una terza parte. Non ci sono motivi per cui il governo dovrebbe imporre gli airbag, per dire, poiché questi proteggono le persone dentro l0auto. Se voglio proteggere me stesso dovrei farlo a mie spese. Però il governo ha delle ragioni per proteggere terze persone che non hanno volontariamente deciso di contrattare. Come può allora il governo agire contro l’inquinamento? Il miglior modo per farlo non è avere dei burocrati che scrivono delle regole per imporre che un’auto debba avere questo o emettere quest’altro. Il miglior modo è imporre una tassa sul costo degli inquinanti emessi da un’auto e creare un incentivo per i produttori e per i consumatori ad abbassare il livello di inquinamento.
Michael Greenstone (Università di Chicago, in precedenza al MIT). “Quello che succede quando accendiamo la luce la cui elettricità deriva da un impianto a carbone o quando guidiamo la nostra auto è che l’anidride carbonica è emessa nell’aria e questa spande i suoi danni in Bangladesh, a Londra o a Houston contemporaneamente. I media riportano spesso che esiste un consenso tra gli scienziati circa gli effetti dell’attività umana sul clima. È meno noto al grande pubblico che c’è un consenso ancora maggiore tra gli economisti che la soluzione più pratica al problema è quella di mettere un prezzo al carbonio. Da Friedman in poi, a destra come a sinistra, non c’è controversia in merito.
”
DICIASSETTE
https://www.env-econ.net/2007/08/a-comment-on-cl.html
James Galbraith gets to the heart of the dilemma facing climate change economics …
He ponders the solution offered by mainstream economists, mainly carbon taxes and cap-and-trade systems, noting that they all rely on markets and competition. Then he directly questions whether that’s the way to go …
I’m not sure I’m ready to sign up, but I thought I’d pass it along since you so rarely see a noted economist directly questioning the assumption that markets can tackle this problem.
This represents one of those criticisms of economists that just isn’t so, that we all think markets can solve everyting. We don’t (see here). It is not the market that must provide the signal to reduce carbon but the government with public policy. Cap-and-trade and carbon taxes are government policies that harness economic incentives. Relying on the market and harnessing market forces within government policy are two very, very different things.
Galbraith’s piece, not surprising in MJ, contains this line:
Because, as the Stern Review makes clear, if CO2 isn’t stabilized soon, then catastrophe is certain.
Catastrophe is certain? I don’t think so. Certain means that there is a 100% chance that it will happen. The IPCC puts the chance of something really bad (i.e., not catastrophe) happening at less than 100%.
Also, I thought the only certain things were death and taxes? So, here is a play on that old joke (and you can quote me):
The only certain things in life are death without carbon mitigation policy and taxes with it.
— John Whitehead, 2007
And here is the meat of Galbraith’s anti-market argument:
The market’s real failure is that it allows for no signal from the future to the present, either from the conditions that will exist 30 years hence or from the people who will be alive and working then. The question becomes: Can we really create a market in which those far-off voices are effectively heard?
Mainstream climate change economics assumes so. “Establishing a carbon price, through tax, trading or regulation, is an essential foundation for climate-change policy,” the Stern Review posits. This makes some sense. After all, markets and taxes encourage cheap solutions, and there is plenty of low-hanging fruit. For a start, why not replace state sales and federal payroll taxes with carbon taxes? A cap-and-trade system would lead industry to use low-emissions technologies more and high-emissions technologies less. Business leaders are rallying behind a “carbon price.” Fine. Give it to them.
But is tinkering with the market enough? According to the Stern Review, stabilizing atmospheric carbon at 550 parts per million requires cutting total emissions by a quarter by 2050, in the face of population and economic growth. Many experts, including nasa’s top earth scientist, James Hansen, favor even more drastic reductions. Goodstein simplifies bluntly: We have 30 years to get the gasoline out of cars and the coal out of power plants, a goal beyond the power of markets.
Market policies rely on competition, and are responsive only to prices. But corporations such as ExxonMobil and txu like to run the world as they see fit. …
My view is that consumers run the world, er, markets. Buying gasoline and power are voluntary decisions that can be altered with higher prices. We might ban CFCs and other products that have obviosly negative impacts, but all of gasoline and coal?
Also, didn’t we used to think that railroad barons ran the world? Technology took care of that problem. I’m no techno-fix-all dork, but if you think that ExxonMobil runs the world, just consider what Tim always says in response to Peak Oil — the stuff that ExxonMobil sells won’t so abundant much longer, this will drive the price of oil and gasoline to a point where people decide to switch to some other energy source on their own.
DICIOTTO
Robert Stavins: Regolare le emissioni di anidride carbonica allo stesso modo di quelle di altri inquinanti non funziona. Il carbonio è ovunque. Si emette CO2 producendo energia, guidando le auto, facendo il cemento ecc. Parliamo di centinaia di milioni di fonti. L’idea di ridurre le emissioni attraverso delle regolamentazioni fonte per fonte è non attuabile. Una tassa sulle emissioni di andirdire carbonica, proporzionata a quanto ciascuna fonte emette, fornisce incentivi a tutti, alla compagnia elettrica come all’industria cementiera come a all’uso della lavastoviglie in famiglia, affinché tali emissioni vengano ridotte. Una carbon tax è come una bug bomb. Tutto il resto, il mondo delle soluzioni second best, è come correre attorno al tuo appartamento con un flayswatter.
Rendere le auto più efficienti, per dire, ha una controindicazione: riduce il costo della guida per cui incentiva a guidare di più.
Analogamente le regolazioni sull’intensità del carbonio sono una sorta di sussidio al gas (meno carbon intensive del carbone) ma ciò che vogliamo è una tassa sia sul carbone che sul gas.
Certo. Nel valutare le alternative occorre confrontare le soluzioni second best con il punto di partenza del non fare niente.
DICIANNOVE VENTI
https://www.env-econ.net/2007/04/an_inconvenient.html
A livello base una carbon tax e una politica cap and trade possono essere usate per raggiungere la stessa riduzione di inquinamento. Ambedue forniscono incentivi a ridurre l’inquinamento in modo più efficiente. Le carbon tax incentivano l’innovazione per quanto colpiscano le imprese: i profitti persi a causa dei costi di abbattimento dell’inquinamento incentivano ad abbattere tali costi. Però dato che colpiscono direttamente le imprese, queste preferiscono i sistemi di cap and trade, che in ultima analisi sono più facilmente implementabili, perché riscontrano meno opposizione.
https://www.env-econ.net/2007/05/pointcounterpoi.html
I understand the squabbling by others … since there is a lot of money at stake. The distribution of wealth from various carbon policies is examined in a recent CBO Brief (I hope to summarize this very, very soon).
Huh? I thought that most of the political appeal of markets is that firms are hoping that permits are given away leading to profit opportunities (e.g., ED’s Business Coalition). Consumer prices will rise, (i.e., internalizing the negative externality) whether carbon is removed with taxes or tradeable permits (i.e., allowances). On this point, see the excellent CBO Brief. In short:
Regardless of how the allowances were distributed, most of the cost of meeting a cap on CO2 emissions would be borne by consumers, who would face persistently higher prices for products such as electricity and gasoline.
VENTUNO
https://www.env-econ.net/2017/02/message-to-enviros-chill.html
Charles Komanoff (of the Carbon Tax Center) at The Nation:
I agree that “progressives” need to get on board the carbon tax train. One hang up might be labeling this as a “conservative” approach. I’m not sure why this is being labeled a “conservative” carbon tax. If there is anything conservatives don’t like these days, it is higher taxes. The “conservative” proposal for a carbon tax used to include revenue-neutral tax recycling — lowering income taxes with an equal amount of carbon taxes raised. Now “conservatives” want to give the money back to the public as dividends. I guess both of these options differ from the “progressive” approach to the government keeping the revenue. Whatever, I don’t think the ideological labels are helpful.
One big quibble (er, a big quibble is probably not a quibble, it is more like a beef): “Carbon taxes are [not] the only policy tool that, by slashing demand in a rapid, predictable way, divests our economy from fossil fuels and enables governments, business, and consumers to make investments in the transition to clean energy.” I added the bracketed term because cap-and-trade could do the exact same thing.
The Carbon Tax Center has six objections to cap-and-trade. The style is to compared an idealized textbook carbon tax with the sort of cap-and-trade that might actually be put in place by Congress (e.g., Waxman-Markey):
- Whereas carbon taxes lend predictability to energy prices, cap-and-trade systems aggravate the price volatility that historically has discouraged investments in less carbon-intensive electricity generation, carbon-reducing energy efficiency and carbon-replacing renewable energy.
- Carbon taxes can be implemented much sooner than complex cap-and-trade systems. Because of the urgency of the climate crisis, we don’t have the luxury of waiting while the myriad details of a cap-and-trade system are resolved through lengthy negotiations.
- Carbon taxes are transparent and easily understandable, making them more likely to elicit the necessary public support than an opaque and difficult to understand cap-and-trade system.
- Carbon taxes aren’t easily subject to manipulation by special interests, while a cap-and-trade system’s complexity opens it to exploitation by special interests and perverse incentives that can undermine public confidence and undercut its effectiveness.
- Carbon taxes address emissions of carbon from every sector, whereas some cap-and-trade systems discussed to date have only targeted the electricity industry, which accounts for less than 40% of emissions.
- Carbon tax revenues would most likely be returned to the public through dividends or progressive tax-shifting, while the costs of cap-and-trade systems are likely to become a hidden tax as dollars flow to market participants, lawyers and consultants.
I think the first five of these are easily debunked:
- A price collar can limit the carbon permit price volatility.
- This is an assertion that assumes a carbon tax would not have lengthy negotiations.
- Markets are not all that difficult to understand and I need to see some empirical evidence that transparent and easily understandable leads to increased public support.
- I would predict that special interests would make try to make sure that there are loopholes so that they don’t pay the flat tax rate. It is a bit naive to think otherwise.
- Why can’t cap-and-trade cover every sector too? Answer: it can.
Number 6 takes a little more discussion. Carbon permits in a cap-and-trade system can be auctioned off to collect just as much revenue as a carbon tax. I’m not sure why you would choose cap-and-trade over a carbon tax with full permit auctions since there would be no trading as firms would bid up to their marginal abatement cost. Cap-and-trade with freely distributed permits would provide polluters with an asset. Relatively clean firms will make money as they sell their permits. I’m not sure why the always-evil “lawyers and consultants” will make more money off a real-world cap-and-trade plan than a real world carbon tax.
To summarize, two points:
- The carbon tax with dividends is a great proposal.
- The cap-and-trade option should not be dismissed as easily as some would like to dismiss it.
VENTIDUE
https://www.env-econ.net/2013/01/can-republicans-warm-up-to-a-carbon-tax-nationaljournalcom.html
https://scholar.harvard.edu/files/mankiw/files/smart_taxes.pdf
La maggior parte delle imposte tassano ciò che vogliamo avere di più: lavoro, investimenti, business, attività- in base a come definisci la crescita economica (in senso più o meno ampio), queste imposte riducono la crescita, arguably o definitely.
Una tassa pigoviana crea crescita economica permettendo ai mercati di allocare le risore in modo più efficiente.
Gli economisti liberal tendono poi a voler usare le entrate per aumentare i servizi publlici o per sussidiare le energie alternative o per stimolare l’economia in altri modi.
Gli economisti conservatori tendono a voler usare le entrate per abbassare altre imposte o per dare a tutti dei dividendi o abbassare il deficit.
VENTITRE
https://www.env-econ.net/2017/02/larry-summers-likes-republicans-carbon-tax-proposal.html
https://www.clcouncil.org/media/2017/03/The-Conservative-Case-for-Carbon-Dividends.pdf
La proposta è di introdurre una carbon tax di ammontare significativo negli Stati Uniti per contrastare il cambiamento climatico. L’imposta dovrebbe essere accoppiata con un meccanismo di restituzione ai consumatori, un rollback di regolazioni command and control e un meccanismo di aggiustamento ai confini.
Gli Stati Uniti hanno un obbligo morale e prudenziale per fare da guida alla lotta ai cambiamenti climatici. Non ci sarebbero segni più rilevanti di una carbon tax per testimoniare l’impegno ad agire. L’adozione statunitense di una carbon tax incoraggerebbe altri a seguire l’esempio. Il meccanismo di aggiustamento ai confini indurrebbe le nazioni estere a preferire che i loro inquinatori paghino loro anziché gli Stati Uniti. Poiché una carbon tax è facile da cambiare permetterebbe di poter rispondere a nuovi sviluppi nella scienza del cambiamento climatico.
La sostituzione della regolazione command e control con una carbon tax è un passo positivo. Riduce l’incertezza e quindi incoraggia gli investimenti. Alzare i prezzi del carbonio scoraggia tutti i tipi di utilizzo, siano di produzione dell’energia o di trasporto, incentivando l’uso di carburanti alternativi o la riduzione del consumo di energia. Perciò è un modo efficiente di ridurre le emissioni. Ovviamente l’imposta deve essere sufficientemente alta da ridurre le emissioni a livelli almeno uguali a quelli delle regolazioni che vengono meno.
Restituire ai cittadini una somma delle entrate conseguenti alla carbon tax, una somma uguale per tutti, è molto sound. Poiché una persona che guadagna due milioni di dollari non riceve più di una che ne guadagna 20.000, la misura è altamente progressiva. Ricorda l’approccio dell’Alaska a suddividere le entrate di petrolio equamente tra tutti i cittadini. L’approccio di dare un dividendo anziché abbassare le imposte sul reddito renderà le persone più attente alla protezione ambientale poiché quando la carbon tax sarà attuata le persone otterranno una restituzione più visibile e più grande.
VENTIQUATTRO VENTISETTE
https://economics.harvard.edu/files/faculty/40_Smart%20Taxes.pdf
https://www.env-econ.net/2011/08/a-reading-for-the-pigou-club.html
https://www.env-econ.net/2013/03/common-resources-on-chinas-carbon-tax-plan.html
La Cina nel 2013 voleva introdurre una carbon tax e usare le entrate per promuovere l’innovazione e lo sviluppo delle imprese piccole e medie. Inoltre da tempo ha sviluppato programmi pilota relativi a sistemi di scambio delle emissioni.
Una carbon tax è una grande idea per tre ragioni.
Una carbon tax fa scendere le emissioni di CO2. La Cina è il primo emittente di gas serra al mondo. Le sue emissioni crescono a ritmi spaventosi. Una carbon tax sarebbe un’ottima notizia per il cambiamento climatico.
Una carbon tax aiuterà a ridurre l’inquinamento dell’aria e dell’acqua. Questo perché le attività a più alta intensità di carbonio, come bruciare il carbone e l’industria pesante, sono anche molto inquinanti. Imporre alle industrie di dover sopportare il costo delle loro emissioni avrà l’effetto di trovare il modo di ridurre l’emissione di prodotti nocivi generati insieme al carbonio.
Una carbon tax è il modo meno costoso per ridurre le emissioni. Data la pressante richiesta di continuare nel suo sviluppo economico, una carbon tax è il migliore strumento che possa essere sviluppato.
VENTOTTO TRENTADUE
https://www.env-econ.net/2008/03/sociologists-ni.html
Why would a carbon tax work but a gas tax won’t? Is it because business firms respond to higher taxes but households don’t? This is stinkin’ thinkin’ because business firms will try to pass all of the carbon tax onto households. For the carbon tax to work, households must rebel against the higher prices by buying less of the carbon intensive goods. In so doing, they’ll force firms to eat part of the carbon tax. Reference: see the public finance chapter of your introductory economics textbook.
In my model, a higher gas tax ($1/gallon) would raise gas prices. This would cause people to alter their behavior in various ways:
- drive less
- purchase more fuel efficient vehicles
- move closer to work
- update: slow down
https://www.env-econ.net/2016/07/canada-to-implement-national-carbon-price-thehill.html
Empirical and simulation models suggest that the [British Columbia carbon] tax has reduced emissions in the province by 5–15%. At the same time, models show that the tax has had negligible effects on aggregate economic performance, though certain emissions-intensive sectors have faced challenges. Studies differ on the effects of the policy on income distribution but agree that they are relatively small. Finally, polling data show that the public initially opposed the tax but now generally supports it.
https://www.env-econ.net/2010/02/how-about-carbon-tax-or-permit-revenue.html
Mankiw si preoccupa dell’insostenibilità del debito rispetto alla crescita del lungo termine, spiega perché la vat è un’imposta non neutra ma non parla della carbon tax.
https://www.env-econ.net/2017/02/republicans-hope-for-climate-change-action.html
Una carbon tax crecente. Il piano parte da una tassa di 40 dollari a tonnellata per arrivare nel tempo a 50 dollari o più in modo da avere l’impatto desiderato sui consumi e sulle emissioni. A 40 dollari a tonnellata il gruppo stima che la carbon tax produrrebbe entrate per 300 miliardi l’anno. A 40 dollari la tassa aggiungerebbe un 36% per gallone ai prezzi del gas.
Carbon dividend. Tutti i ricavi saranno restistuiti ai contribuenti americani. La Social Security Administration si occuperà di amministrare il piano. Una famiglia tipica di quattro persone riceverebbe 2000 dollari l’anno. I critici conservatori hanno criticato la carbon tax in generale poiché sarebbe ingiusta rispetto alle famiglie di lavoratori. L’idea del dividendo è nata per affrontare questo problema e mantenere neutrale la proposta da un punto di vista di entrate per il governo.
Tariffa di aggiustamento ai confini. Le importazioni di carbonio sarebbero soggette ad aggiustamenti tariffari.
Revoca delle regolamentazioni. Il piano prevede l’abolizione del Clean Power Plan di Obama e di altre regolamentazioni dell’Agenzia di Protezione Ambientale, finalizzate alla riduzione di emissioni di CO2. Per rendere questa politica appetibile gli autori chiedono una tassa alta abbastanza per conservare le riduzioni di emissioni pari o superiori a quelle ottenute con le attuali regolamentazioni. *Regulatory via www.cnn.com
The New York Times editorial authored by Martin Feldstein, Ted Halstead and Greg Mankiw begins like this:
CRAZY as it may sound, this is the perfect time to enact a sensible policy to address the dangerous threat of climate change. Before you call us nuts, hear us out. …
https://www.env-econ.net/2006/06/sachs_on_pricin.html
Sachs: non ci sono modi credibili di attaccare il cambiamento climatico senza alzare il costo delle emissioni di anidride carbonica.
Marvin ROmanow: Se non cambi il prezzo di una cmmodity non aspettarti che il pattern di uso cambi.
There are many ways to tax carbon, said Romanow, and the trick is to do it in a way that doesn’t target a single industry, producer or province. “I think industry … would have very limited objections to stuff that’s applied across all sectors that produce carbon dioxide.”
TRENTATRE
https://www.env-econ.net/2016/01/proof-that-a-price-on-carbon-works-the-new-york-times.html
From the New York Times editorial page:
Lawmakers who oppose taking action to lower greenhouse gas emissions by putting a price on carbon often argue that doing so would hurt businesses and consumers. But the energy policies adopted by some American states and Canadian provinces demonstrate that those arguments are simply unfounded.
Around the world, nearly 40 nations, including the 28-member European Union, and many smaller jurisdictions are engaged in some form of carbon pricing. In this hemisphere, British Columbia, Quebec, California and nine Northeastern states have raised the cost of burning fossil fuels without damaging the economy. Alberta, Canada’s biggest oil and gas producer, and Ontario have said they will adopt similar policies.
Carbon pricing comes in two forms: a direct tax on emissions or a cap on emissions. British Columbia, for instance, has levied a tax on emissions from fuels like gasoline, natural gas and heating oil. California and Quebec, which are working together, place a ceiling on overall emissions and allow utilities, manufacturing plants, fuel distributors and others to buy and sell permits that entitle them to emit greenhouse gases. Like the cap itself, the number of permits decline over time, becoming more expensive.
Many economists regard carbon taxes as the simpler and more elegant solution, and cap-and-trade systems like the one that failed in the United States Congress as complex and hard to explain. But both systems effectively raise the price of using fossil fuels, which encourages utilities and other producers to generate more energy from low-carbon sources like solar, wind and nuclear power.
British Columbia, which is home to 4.7 million people, has placed the highest price on emissions in North America, taxing a ton of carbon emitted at 30 Canadian dollars, or about $21. By comparison, emission permits in California and Quebec are trading at about $13 a ton. And permits sold for $7.50 a ton in a December auction in the Northeastern trading system known as the Regional Greenhouse Gas Initiative. That system covers emissions from power plants in nine states that include Connecticut, New York and Massachusetts.
British Columbia started taxing emissions in 2008. One big appeal of its system is that it is essentially revenue-neutral. People pay more for energy (the price of gasoline is up by about 17 cents a gallon) but pay less in personal income and corporate taxes. And low-income and rural residents get special tax credits. The tax has raised about $4.3 billion while other taxes have been cut by about $5 billion. Researchers have found that the tax helped cut emissions but has had no negative impact on the province’s growth rate, which has been about the same or slightly faster than the country as a whole in recent years.
Meanwhile, jurisdictions using the cap-and-trade approach like California, the nine Northeastern states and Quebec are investing the revenue generated by auctioning emission permits in mass transit, energy efficiency, renewable energy and other strategies to reduce carbon emissions. Some of the revenue is also dedicated to helping low-income families cope with higher energy costs.
In Alberta, a new government announced in November that it would impose a tax of 30 Canadian dollars on most greenhouse gas emissions by the start of 2018. The province’s leaders also said they would phase out the use of coal power plants and impose caps on carbon and methane emissions from Alberta’s oil and gas industry.
These actions deserve applause. But their real value may lie in providing a template for the rest of the world. Broad participation is essential to keeping warming below a point of no return; as a practical matter, it is also essential to keep companies from moving their operations to nations that do not impose a cost on carbon emissions.
In that context, China’s announcement last year that it would set up a national cap-and-trade system was hugely encouraging — the world’s largest emitter agreeing to tax itself to help solve a problem that, only a few years ago, it barely acknowledged. Yet Congress has refused to act even as it becomes clear that putting a price on greenhouse gas emissions is the most direct and cost-effective way to address climate change.
TRENTAQUATTRO TRENTASETTE
Proposta di un gruppo chiamato American for Carbon Dividends, che mira a creare supporto pubblico per una carbon tax così impostata:
Verrebbe stabilita una tassa iniziale di 40 dollari per tonnellata di CO2 prodotta e il prezzo aumenterebbe nel tempo. Questo farebbe alzare il costo di un gallone di gas di circa il 38%, con effetti simili sul riscaldamento e su altri usi dell’energia per le famiglie. Tutto ciò potrebbe incoraggiare le persone e le imprese a diventare più efficienti nell’uso dell’energia e a ridurre il loro uso di fonti fossili.
Per compensare i prezzi più alti le entrate sarebbero restituite ai consumatori sotto forma di dividendo. Il gruppo stima che a una famiglia di quattro persone sarebbero destinati 2000 dollari nel primo anno.
https://www.env-econ.net/2018/01/quote-of-the-day-revenue-neutral-carbon-tax.html
Le entrate fiscali susseguenti a una tassa di 40 dollari la tonnellata saranno di 1,5 trilioni di dollari.
Adele Morris and Evan Weber:
Since the release of the final rule, much attention has been given to how states can trade emissions allowances across borders to reach goals jointly, allowing more abatement where costs are lowest. The requirements for these complicated schemes occupy hundreds of pages of the rule, while EPA devotes only one sentence (in the preamble) to the potentially equally cost-minimizing carbon tax approach. The agency clearly prefers cap-and-trade over other options, as evidenced by the detail in the rule and EPA’s accompanying proposed federal plan for states who do not submit an acceptable (or any) implementation plan.
However, another factor accounts for EPA’s apparent short shrift for a tax approach: the concept is remarkably simple to understand—one-sentence simple—and just as easy to administer.
Aumentando gradualmente il costo di emissione dei gas serra caricando una tassa per tonnellata di CO2 emessa gli stati potrebbero ridurre la domanda di elettricità da fonti fossili e lasciare spazio alle alternative a emissioni zero come l’eolico e il solare. Gli stati già tassano la benzina, il diesel e il gas naturale. Uno stato dovrebbe solo modellizzare (come già fa l’EPA) la tassa in modo da farla coincidere coi target già previsti per il clean power plan.
TRENTOTTO
https://www.env-econ.net/2013/04/if-carbon-taxes-are-so-great-stand-up-economist.html
Yoram Bauman:
A good question on Friday from a student at Westminster College:
If revenue-neutral carbon taxes are such a great idea, why has only British Columbia adopted this policy?
I gave what I thought was a decent answer in class, but wanted to put some more thoughts down in writing:
1) People prefer the devil they know to the devil they don’t. …
2) People don’t (yet) accept that climate change is a serious problem. …
3) Economists think about the world differently than “normal people”. …
4) There will be winners and losers. …
Go read the Standupeconomist.com to get the details.
Me? I think that carbon taxes are a great way to raise government revenue too (especially with a large and growing government debt). So, why hasn’t anyone adopted this idea? As far as I can tell there are no good reasons. Here are some bad reasons:
- Because people like to spend borrowed money
- Because people would rather not repay borrowed money
- Some politicians have convinced the public that a tax is a bad thing
- Some politicians have convinced the public that everyone other than oneself is on the government dole and those government benefits should be cut
http://standupeconomist.com/if-carbon-taxes-are-so-great/
If revenue-neutral carbon taxes are such a great idea, why has only British Columbia adopted this policy?
I gave what I thought was a decent answer in class, but wanted to put some more thoughts down in writing:
1) People prefer the devil they know to the devil they don’t.
More specifically, people seem to prefer whatever tax system they have now, however lousy it may be, to possible alternatives. A good example here concerns Washington and Oregon, which both instituted income taxes in the 1930s. Washington’s income tax was found to be in violation of the state constitution, so the state adopted a sales tax instead. To this day Washington has a sales tax but no income tax, and voters would almost certainly reject an effort to replace the sales tax with an income tax. Across the state line, Oregon has an income tax but no sales tax, and voters there would almost certainly reject an effort to replace the income tax with a sales tax. Go figure.
I think that one part of the explanation here is that tax reform proposals seem to automatically engage people’s cynicism and mistrust of government, so they’re inclined to think the worst. In the case of revenue-neutral carbon taxes (i.e., raising taxes on fossil fuels but lowering existing taxes on income, sales, etc) the worst-case thinking is “You’re going to raise tax fossil fuel taxes but you’re NOT going to lower existing taxes.” This is a very difficult argument to counter, although B.C. has tried, e.g., by stipulating that the finance minister loses her salary if the tax is not revenue-neutral.
2) People don’t (yet) accept that climate change is a serious problem.
Tax reform is a big deal, and you’ve got to have a good reason to get behind it. Many people don’t feel that urgency right now.
When my older brother and I were kids, one of our household chores was hanging up the laundry. So we would go to the laundry room in our apartment building and proceed to snap towels at each other and otherwise goof around. And then eventually my brother would announce that it was “No f***ing around time”, at which point we would get down to business. The analogy, of course, is that Americans are still goofing around when it comes to climate change. At some point they may recognize that it is “No f***ing around time”, at which point they’ll be more willing to consider significant changes like environmental tax reform.
Put points #1 and #2 together and you see that people are inclined to stick with the status quo in part because they think we can just keep doing what we’ve been doing. But we can’t. The real choice is between changing our tax system and changing our climate. The status quo is not an option.
3) Economists think about the world differently than “normal people”.
When economists think about taxes, they mostly focus on efficiency and things like deadweight loss, or what was once described as plucking the goose to get the greatest amount of feathers with the least amount of hissing. When “normal people” think about taxes, they mostly focus on equity and fairness. And, as above, cynicism and mistrust of government play a major role.
Similarly, when economists think about environmental issues, they naturally think about using market-based instruments like carbon taxes or cap-and-trade systems. When “normal people” think about environmental issues, they mostly think about regulatory policies (like fuel-economy standards) or government-funded R&D into clean energy.
Finally, when economists think about policy, they often focus on pragmatic consequences and use a cost/benefit framework. In contrast, “normal people” often focus on left-versus-right ideology. (This contrast is the basis for one of my jokes, namely that economists are the kind of people who are against the death penalty because it’s too expensive.) Unfortunately, environmental tax reform exists in a kind of ideological no-man’s-land: when I make the case for using capitalism to tackle climate change, the stereotypical responses from the left and right, respectively, are “Capitalism? We don’t believe in capitalism!” and “Climate change? We don’t believe in climate change!”
4) There will be winners and losers.
Environmental tax reform will generate gains that are bigger than the losses, but there will be losses and they will disproportionately affect certain people and certain economic sectors. This was addressed in the equity part of #3 above, but it’s worth emphasizing that some people will lose their jobs and some industries will shrink. Those changes are inevitable if we want to tackle climate change, and in the big picture they will be offset by new jobs and growing industries in other economic sectors. There are ways to try to minimize these losses, e.g., by providing offsets for low-income households (as in B.C.) or by targeting certain tax reductions for energy-intensive industries (as in our proposal for Washington State). But in the end the theoretical ideal—a policy that makes everyone better off and makes nobody worse off—is unattainable; in the real world there will be winners and losers.
Of course, it’s worth remembering that climate change will produce winners and losers, too, and the odds are that the losses will outweigh the gains. This takes us back to #2 above, that people don’t (yet) acknowledge that climate change is a serious problem. If and when they do, perhaps they will be willing to take the difficult steps that will be necessary to deal with it.
- A fisheries analogy
A similar Tragedy of the Commons situation often exists with overfishing (e.g., with cod in New England), and the political challenges are often even more stark. The obvious solution to overfishing is to limit fishing and allow stocks to recover, and economists would recommend use economic instruments like a tax on fishing or a cap-and-trade system (which is known in the fisheries world as an ITQ system of Individual Tradable Quotas). But these policy recommendations almost always encounter resistance from the fishing community itself, the complaint being that you’re taking a struggling industry and kicking it while it’s down. The four issues identified above can be clearly seen: People are skeptical of changing the system they currently have (it’s worked for generations!), they don’t always believe that the problem is serious (maybe the fish are just having a bad year and will be back next year!), they think differently than economists (you’re kicking us when we’re down, and that’s not fair!), and there are winners and losers (what about the older skippers who just want to fish for another year or two and then retire?).
TRENTANOVE QUARANTUNO
https://www.env-econ.net/2013/03/a-carbon-tax-in-a-congressional-budget-proposal.html
We can no longer afford to ignore our responsibility to future generations to address climate change before it is irreversible. The Back to Work Budget would impose on polluters a $25 per ton price on carbon dioxide (increasing at 5.6% a year), rebating 25% of all revenues as refundable credits to protect low income families. The Energy Information Administration found that a similar proposal would result in carbon emissions reductions of 26% below 2005 levels by 2020. This would go a long way toward setting the United States on a path to avoid increasingly extreme and destructive weather, particularly when combined with air pollution controls measures under the Clean Air Act and enhanced energy efficiency.
The Economic Policy Institute says that:
Net of this rebate, carbon pricing would raise over $1.1 trillion of revenue over FY2014–2023.
What’s not to like?
https://www.env-econ.net/2016/07/were-going-to-need-more-tax-revenue-heres-how-to-raise-it.html
Jared Bernstein:
Broadly speaking, two things matter when it comes to the tax system: First, as just noted, the system needs to raise enough revenues to cover the fiscal obligations and economic challenges we face. Second, our tax system should reduce, not exacerbate, market-driven inequality. Those with the highest incomes should face the highest tax rates, and the public tax collection infrastructure should protect the code’s progressivity by blocking tax avoidance and prosecuting tax evasion. …
Thus, we need to raise more revenues in a way that is progressive and reduces tax avoidance and evasion. What changes might be made that are consistent with these criteria? While most tax increases should be directed at the top, it’s a mistake to limit tax hikes to the very wealthy. …
With that said, here’s what I’d recommend to progressively raise more revenue, both on the individual and business side of the tax code. My goal is not to be exhaustive—there are many good ideas I don’t explore, some of which are contained in the recent Obama budget—but to set forth more of a modular framework (as opposed to all-out “tax reform,” a recipe for an endless, fruitless, muddled debate) and provide numerous examples of the type of ideas that fit neatly into it. …
- A tax on carbon. This one is obvious and essential. Yes, it would raise taxes on non-rich people (and many such taxes include a rebate to lower-income people who spend more of their income on energy). But it’s a defensible tax increase.
The Obama administration recently proposed a $10-per-barrel tax on oil, which raises $319 billion over ten years. Especially given how cheap oil has recently become, I appreciate their motivation, but I’d rather raise the federal gas tax. This tax is how we fund both highway infrastructure and the federal contribution to public transit, and it has been stuck at 18.4 cents a gallon in nominal terms since 1993. Meanwhile, the costs of maintenance have gone up, as has vehicle mileage, so no wonder the Highway Trust Fund is always broke. We and our politicians have conspired to create a magical world where we can maintain our roads and bridges and support our urban mass transit without paying for it.
A tax on fossil fuels is essential partly because they’re socially underpriced. Here, the National Cooperative Refinery Association oil refinery is silhouetted against the setting sun in McPherson, Kansas.
Moreover, and this is of course the other huge reason we need to raise the tax liability on fossil fuels: They’re socially underpriced. This is an opportunity to tax a seriously threatening negative externality, breaking the curse of magical thinking on transportation infrastructure, and raise needed revenues. There’s even been a touch of bipartisan support for the idea. (That’s why I’d go for this over the oil surcharge.) One such plan raises the gas tax by 12 cents a gallon over two years (6 cents per year) and then indexes it to inflation. That would raise $180 billion over ten years.
Translation:
- “require electric utilities to increase energy efficiency” = command and control
- “extend tax credits” = subsidy
- “make it cheaper for consumers” = subsidy
- “increase spending on research” = subsidy
The combination is surely to be more costly, i.e., less efficient, than carbon pricing (i.e., a carbon tax or cap and trade)
QUARANTADUE
https://www.env-econ.net/2007/10/some-basic-econ.html
Quebec province slapped the country’s first carbon tax on energy firms on Monday, as Canadian business leaders urged “environmental taxation” to rein in greenhouse-gas emissions.
The tax, proposed more than a year ago, is expected to raise C$200 million ($202 million) a year to fund the province’s plans to reduce emissions.
Basic enironmental econ lesson–the tax will reduce emissions. If set properly, the tax can result in the efficient level of emissions. So why are the revenues being used to “fund the province’s plans to reduce emissions”? Is the tax set below the desirable level and more reductions are needed? If so, then why not set the tax higher and then use the revenues for other stuff–like reducing inefficient labor taxes?
Read on for more Env-Econ 101…
It [the tax] includes a per-litre levy of 0.8 Canadian cent for gasoline, 0.9 Canadian cent for diesel fuel, 0.96 Canadian cent for light heating oil, and C$8 a tonne for coal.
It wasn’t immediately known whether the oil companies, including Petro-Canada (PCA.TO: Quote, Profile , Research) and Imperial Oil (IMO.TO: Quote, Profile , Research), would pass along the cost to consumers.
Almost all output/production taxes get passed on to consumers. The question is: how much of the tax will be passed on? It depends on how sensitive consumers are to price changes (we call this the elasticity of demand). If consumers are very sensitive to price changes (elastic demand) then the companies will absorb the tax. Passing it on to consumers will result in a big drop in revenues (sales)–bigger than the drop from absorbing the tax. But, if consumers are not very sensitive to price changes(inelastic demand) then companies can pass the tax on to consumers with little effect on the bottom line. So ask yourself–are consumers sensitive to price changes for energy? If not, then yes, companies will pass the tax through to the consumer. Who’s fault is that?
Separately, the Canadian Council of Chief Executives said Canada should become “an energy and environmental superpower,” and suggested higher energy prices to help cut emissions, the Globe and Mail newspaper reported on Monday.
Companies calling for taxes?! Hmmmm…why might that be? My guess is that the companies know carbon policy is coming and taxes–for the reason I outlines above among others–will have the least impact on their profits.
Since 1990, greenhouse-gas emissions in Canada, a net exporter of energy, have risen more than in any other leading industrialized country, data submitted by the Group of Eight rich nations to the U.N.’s Climate Change Secretariat shows.
And they call us greedy. I always knew there was something fishy about those Canadians, eh?
Quebec has pledged to meet its targets under the Kyoto Protocol on climate change.
Unfortunately, Kyoto will be obsolete next year.
Canada has signed on to the agreement, which calls for a 6-percent cut in emissions from 1990 levels by 2012, but Prime Minister Stephen Harper has said that target is impossible to achieve.
Instead, the minority Conservative government aims to cut emissions from greenhouse gases — the key contributor to climate change — by 20 percent from current levels by 2020.
Anyone know how a 6% cut from 1990 levels compares to a 20% cut from today’s levels?ù
QUARANTATRE
https://www.env-econ.net/2013/05/a-carbon-trading-system-worth-saving-nytimescom.html
L’Unione Europea è diventata un pioniere nel contrastare il cambiamento climatico iniziando il primo sistema di cap and trade disegnato per ridurre le emissioni di co2 mettendo loro un prezzo. gli analisti sono preoccupati da errori tecnici. La recessione e il fallimento dei policymaker di rinforzare il sistema sta minando l’efficacia.
Come tutti questi sistemi il programma europeo fissa un tetto alle emissioni golbali che impianti energetici, fabbriche di acciaio, altre industrie possono emettere nell’atmosfera. Il tetto, che è regolato attraverso i permessi, declina ogni anno, forzando le imprese a diventare più efficienti oppure a comprare permessi da un’altra impresa o sul mercato aperto.
Recentemente il prezzo dei permessi è collassato a meno di 4 euro per tonnellata di carbonio, 30 euro in meno rispetto al 2008. Questo è un problema poiché i prezzi bassi scoraggiano gli emittenti a investire in tecnologie e carburanti climate friendly.
In aggiunta allo schema di scambio, l’Europa ha fatto progressi reali nell’affrontare il cambiamento climatico attraverso policy che incoraggiano l’efficienza energetica e le fonti rinnovabli. Però niente farà più per abbattere le emissioni che mettere loro un prezzo, che sia attraverso una carbon tax o un sistema di cap and trad. il lavoro dell’Europa è quello di mettere su un sistem affidabile che non vanifichi i progressi fatti finora.
Mi piace il modo con cui termina l’editoriale, con carbon tax e cap and trade come sostituti con più e meno. Effettivamente una revisione deolla letteratura sulla regolametnazione attraverso prezzi o quantità suggerisce che un approccio ibrido possa essere preferito (per esempio cap and tade con trigger price). Solo i naive credono che uina carbon tax eviterebbe problemi di implementazione. E notiamo che l’asta dei permessi genera entrate fiscali
QUARANTACINQUE
https://www.env-econ.net/2009/03/cap-and-auction.html
Somewhere I saw cap-and-trade referred to as cap-and-auction (can’t find the link and don’t want to look)… as if the trading were a bad thing (I’m not sure if this has been proposed but I’m knee jerk reacting) .
More or less, cap-and-trade would achieve CO2 reductions efficiently (i.e., at least cost) if permits are allocated as giveaways (say, as a percentage of historical output) or with auctions. Under giveaways the low cost abaters have an incentive to sell their permits to the high abaters. The trading feature acts as the abatement cost information elicitation device. The knock on giveaways are the windfall profits that accrue to polluters.
Under an carbon permit auction firms have incentives to bid in line with their abatement costs and permits would go to the high cost abaters (who would be free to emit CO2). The low cost abaters would lose out on permits and reduce their CO2. The final allocation of permits should be about the same and firm/industry abatement costs are ultimately revealed. The knock on auctions is political — more resistance from polluters.
Auctions would reduce the additional efficiency generated by trading if permits are passed out but the trading feature should not be replaced. Gains from trade post-auction could be had by unexpected technological innovations and other surprises. Without the trading feature the dynamic efficiency aspect, i.e., firms trying hard to find ways to cut abatement costs, of incentive-based policy could be lost.
QUARANTASEI
From Greg Mankiw’s Blog:
Club Member Ted Gayer makes five points:
- Either a carbon tax or a cap-and-trade program will result in substantially lower economic costs than command-and-control regulations that mandate technologies, fuels, or energy efficiency standards.
- Given the uncertainty of the future costs of climate policy, a carbon tax is more economically efficient than cap-and-trade.
- Carbon allowances in a cap-and-trade program would be susceptible to price volatility. Price volatility causes economic disruptions and complicates investment decisions. It also could lead to political pressure on Congress to repeal or substantially loosen the cap.
- A carbon tax, in which the revenues are used to offset economically harmful taxes or to pay down our deficit, would substantially lower the cost of climate policy compared to a cap-and-trade program that gives away allowances for free.
- The currently proposed climate bills rely heavily on offsets to reduce the overall costs of cap-and-trade. Given the substantial potential value of offsets, there is a very real concern that offset integrity will not be maintained. This would result in a weakening of the cap, undermining its environmental benefits.
I agree with all points except for a couple of not-so-minor things (or don’t disagree since I don’t work with the minutiae of these models). I don’t agree with:
- The last sentence of #3. At least, I don’t agree the implicit assumption that a carbon tax is immune to political pressure (e.g., this post from Tim).
- The comparison in #4. The relevant comparison is with a carbon tax and cap-and-trade with an auction of permits that raise revenue.
In fairness to Dr. Gayer, I haven’t read his four page testimony (I’m in a SSC meeting and better not [I’m taking a blogging break as the fisheries scientists debate stock assessment]) so these are really comments on Dr. Mankiw’s highlighting of Dr. Gayer’s testimony.
However, here is Dr. Gayer’s conclusion:
I acknowledge that my arguments in favor of a carbon tax over cap-and-trade are made easier in that I am comparing my ideal hypothetical carbon tax to the actual cap-and-trade programs either passed by the House or proposed in the Senate. Indeed, a cap-and-trade program that included a safety valve and that auctioned allowances would achieve many of the economic advantages of a carbon tax.
I wouldn’t dump my girlfriend because she is not quite my ideal hypothetical girlfriend. That is a sign of romantic immaturity (e.g., Beautiful Girls). In the cap-and-trade vs carbon tax debate it is a sign that you really, really like a carbon tax. I continue to fail to see why the proposed cap-and-trade should be compared to the ideal carbon tax.
*The post title works just as well with “boy” substituted for “girl.” It was a bit clunky to write girl/boy or girl (boy) so I simplified.
QUARANTASETTE
https://www.env-econ.net/2008/10/bizarre-no-toug.html
Joe Romm’s analysis over at climateprogress.org is mostly spot on — and if a post starts like this, you already know what comes next. This time he responds to a $10,000 contest organized by EDF (yep, my employer) that asks for submissions to help explain: “What is a carbon cap and how will it cure our oil addiction?”
Romm calls it a “bizzare” contest “to explain something that isn’t true,” since “it is all but inconceivable that a carbon cap will solve our oil addiction.” Well, not so fast.
Un tetto alle emissioni da solo non curerà tutte le malattie, ma è un passo verso la risoluzioen del problema. Un’analisi del Climate Security Act del MIT mostra che le importazioni di petrolio arriveranno a essere inferiori rispetto alle attuali di due terzi entro il 2030 o il 2050 a seconda di cosa inseriamo nel modello. Due terzi di risparmio è già qualcosa.
Alzare i prezzi e basta non risolverà il problema dei trasporti. Il 97% dei veicoli va a petrolio. Modificare questo richiede più che un incremento di prezzi. Obblighi diretti come standard più restrigenti occorrono.
Anche qui il cap and trade mostra il suo potenziale. A seconda di quanti permessi sono messi all’asta anziché regalati, un tetto genera grandi somme di denaro. Parti di queste possono essere usate per iniziare la transizione verso un settore dei trasporti più verde e meno dipendente dalle fonti fossili. Non è facile mettere un numero a questo. E’ plausibile che una combinazione di queste misure potrebbe portare alla riduzione del terzo rimanente.
QUARANTOTTO CINQUANTA
https://www.env-econ.net/2016/07/why-are-carbon-prices-so-low.html
La preferenza per usare politiche prescrittive invece di meccanismi di mercato per coordinare gli abbattimenti di emissioni aiuta a spiegare perhé i prezzi del carbone siano bassi. Alcuni semplici grafici illustrano le fondamenta che stanno alla base di queste cause ed effetti.
Nel grafico sotto ogni blocco colorato rappresenta un’attività di abbattimento diversa (per esempio il trasferimento da carbone a gas, gli investimenti in energie rinnovabili, i miglioramenti di efficienza ecc.). pensa a sesame street che incontra la curva mckinsey. La larghezza del blocco misura la riduzione raggiungibile delle emissioni. L’altezza dei blocchi misura il costo per tonnellata delle emissioni ridotte.
In questo cartoon sul cap and tred supponiamo che le emissioni di base siano 200 e che i policymaker vogliano raggiungere una riduzione del 25%. Se facciamo conto interamente sui permessi di mercato per arrivarci, allochiamo 150 permessi e lasciamo che il mercato decida da dove deriveranno le 50 unità di abbattimento. Un mercato efficiente guiderebbe gli investimenti nell’opzione meno costosa: a + b +1/2c. il costo di abbattimento totale che si sosterrebbe per raggiungere il target sarebbe (20*$10)+(20*$20)+(10*$50)=$1100. Il prezzo di equilibrio del mercato (e il costo marginale per tonnellata di abbattimento) sarebbe 50 dollari.
Ora immaginiamo che in aggiunta al mercato dei permessi siano introdotte delle misure complementare che obblighino lo sviluppo delle opzioni d ed e. questi obblighi prendono l’80% dei modi verso il raggiungimento dei target di emissione. Il ruolo del mercato del carbonio è stato seriamente diminuito: abbiamo bisogno di solo 10 unità in più di abbattimento per colpire il target.
Sotto questo scenario il mercato incentiverà investimenti in 10 unità di a. il prezzo dei permessi scende a 10. Il costo totale del raggiungimento dei target sale a 10*$10 + 20*$100 + 20*$150 = 5100. E noi ci torciamo le mani sul prezzo basso del carbone e sul mercato rotto del carbonio.
Certo. In questo disegno mancano molte complessità del mondo reale. Però illustra due considerazioni del mondo reale. Primo, quando delle misure complementari obbligano opzioni di abbattimento relativamente costose il prezzo del carbonio nel mercato non rifletterà il costo marginale della riduzione delle emissioni. Secondo, fare affidamento sulle misure complementari può far salire il costo di raggiungere un target dato di emssioni.
In California e in Europa c’è evidenza crescente che i bassi prezzi dei permessi nel mercato del carbonio belie costi di abbattimento molto più alti associati a politiche complementari. Per esempio questo paper (https://spot.colorado.edu/~jonathug/Jonathan_E._Hughes/Main_files/PV_Sudsidies.pdf) stima che la California Solar Iniziative ha determinato riduzioni di emissioni a un costo tra 130 e 196 dollari per tonnellata metrica di co2. Il californa lcfs credit price, che riflette l’incentivo marginale a ridurre una tonnellata di mco2e sta attualmente in media attorno a 120dollari per tonnellata metrica di co2. In europa i ricecatori stimano che il costo implicito dei target di energie rinnovabili per tonnellata metrica di co2 stiano nell’ordine delle centinaia di euro per il solare e in alcuni luoghi per l’eolico.
Of course, this cartoon picture omits lots of real-world complexities (see this important EI paper for a more detailed analysis of California’s abatement supply and allowance demand
For example, this paper estimates that the California Solar Initiative delivered emissions reductions at a cost of $130 – $196 per metric ton of CO2. California’s LCFS credit price (. In Europe, researchers estimate that the implicit costs of renewable energy targets per metric ton of CO2 are on the order of hundreds of euros for solar (and wind in some locations).
https://energyathaas.wordpress.com/2016/06/20/time-to-unleash-the-carbon-market/
CINQUANTUNO
https://www.env-econ.net/2009/10/if-at-first-you-dont-succeed-.html
Mankiw puntualizza che le tasse distorcono il comportamento economico. Descrive una policy per mitigare le distorsioni nel mercato dei prodotti (l’esternalità negativa del cambiamento climatico) senza peggiorare le distorsioni nel mercato del lavoro. Infatti una policy climatica deve alzare le entrate in modo significativo tale per cui sia necessario evitare le distorsioni nel merccato del lavoro.
Questo potrebbe causare della confusione tra i non economisti. Mankiw lavora verso la policy più efficiente come opposta a ciò che è meno efficiente. Questa è una posizione onorevolmente Friedmanesca. I non economisti potrebbero non capire la differnza a meno che l’obiettivo della policy più efficiente sia stabilito esplicitamente in un mdo che i non economisti capiscano.
Molte persone nel pubblico generale, compresi acluni economisti, sarebbero felici di una policy climatica più efficiente dello status quo (che non è la situazione più efficiente). Per esempio supponiamo che la policy più efficiente, una carbon tax con ricavi redistribuiti, generi benefici netti di 100 dollari. Un’altra policy efficiente, cap and trade con asta totale, può generare benefici per 90 dollari. Un’altra, la cap and trade senza asta genera 50 dollari. Ognuna di queste sono soluzioni migliori dello status quo e anche migliori delle alternative regolatorie che potrebbero generare benefici netti negativi.
*Note: I’m using a definition of efficient as additional benefits exceed additional costs. The most efficient policy is one where the net benefits are maximized.
**Note: It is rare that a democratic process that allows non-efficiency goals into the mix will generate maximum net benefits.
CINQUANTADUE
https://www.env-econ.net/2009/09/is-mankiw-being-completely-above-board.html
The title to this post is inspired by Tim’s email from the stats department at tOSU but it fits Mankiw’s baffling August 9th attempt at making Siamese twins out of climate policy and tax cuts (A missed opportunity on climate change).
Here is the twinning of a carbon tax and tax cuts:
The textbook solution for dealing with negative externalities is to use the tax system to align private incentives with social costs and benefits. Suppose the government imposed a tax on carbon-based products and used the proceeds to cut other taxes.
Here is Mankiw’s twinning of cap-and-trade auction revenues and income tax cuts:
The auction price of an emission right is effectively a tax on carbon. The revenue raised by the auction gives the government the resources to cut other taxes that distort behavior, like income or payroll taxes.
The twinning is dead wrong. Here is how Mankiw the textbook writer puts it (pp 213-214, fourth edition of the Micro split):
… the government can internalize the externality by taxing activities that have negative externalities …
… Thus, while corrective taxes raise revenue for the government, they also enhance economic efficiency.
A carbon tax or cap-and-trade increases efficiency. Both can raise revenue for the government. The government can do a number of things with the additional revenue but none of these things are required to make correcting negative externalities efficient.
In fairness to Mankiw he makes his efficiency point here:
How much does [zero auction revenue] matter? For the purpose of efficiently allocating the carbon rights, it doesn’t. Even if these rights are handed out on political rather than economic grounds, the “trade” part of “cap and trade” will take care of the rest. Those companies with the most need to emit carbon will buy carbon allowances on newly formed exchanges. Those without such pressing needs will sell whatever allowances they are given and enjoy the profits that resulted from Congress’s largess.
Thank you for that clear explanation (as good as your excellent textbook). But,
The problem arises in how the climate policy interacts with the overall tax system. As the president pointed out, a cap-and-trade system is like a carbon tax. The price of carbon allowances will eventually be passed on to consumers in the form of higher prices for carbon-intensive products. But if most of those allowances are handed out rather than auctioned, the government won’t have the resources to cut other taxes and offset that price increase. The result is an increase in the effective tax rates facing most Americans, leading to lower real take-home wages, reduced work incentives and depressed economic activity.
The macroeconomic problem is that some taxes are too high, distorting economic activity. The macro problem should be decoupled from climate policy as soon as possible. Please?
Here is Mankiw’s conclusion:
As for me, I hope the president refuses to sign a bill that fails to auction most of the allowances. Some might say a veto would make the best the enemy of the good. But sometimes good is not good enough.
In other words, Mankiw hopes that the president vetos a bill that generates more benefits and costs in the hopes that someday we get a bill that generates even more benefits than costs. Me? I think climate policy with economic incentives built in is “good enough.” This would be an important movement in the right direction for environmental policy.
CINQUANTATRE
https://www.nytimes.com/2009/08/09/business/economy/09view.html?_r=2&ref=business
CINQUANTAQUATTRO
https://www.env-econ.net/2007/05/an_latimes_edit.html
Carbon tax vs cap-and-trade
An LATimes editorial on climate change economics has four sections:
- Scary problem
- Carbon tax vs cap-and-trade
- The European market got all screwed up (and then we’re back to #2)
- We’ll never have a carbon tax
In section #1, the opinion person tries to get our attention by saying that CA’s beaches will be gone soon. This doesn’t help.
In section #2, after arguing rightly that The Terminator’s pursuit of cap-and-trade is better than technological and other standards, the opinion person declares that a carbon tax is better than both:
And yet for all its benefits, cap-and-trade still isn’t the most effective or efficient approach. That distinction goes to Method No. 3: a carbon tax. While cap-and-trade creates opportunities for cheating, leads to unpredictable fluctuations in energy prices and does nothing to offset high power costs for consumers, carbon taxes can be structured to sidestep all those problems while providing a more reliable market incentive to produce clean-energy technology.
There are three points in this paragraph and each of them can be disputed.
First, what government policy does not create opportunities for cheating? Has anyone other than me ever heard of someone NOT paying their taxes?
Second, a safety valve can help avoid crazy fluctuations in energy prices.
Third, [begin rant here] the only way that a tax on carbon would not be passed on to consumers in the form of higher prices is if demand is perfectly elastic (i.e., flat). This means that consumers have perfect substitutes elsewhere and as soon as firms try to raise price they flee. Firms can’t raise price as a result. Does this sound like energy markets to you? Can I repeat? Any government policy that addresses climate change will result in higher prices and/or taxes for consumers. There is a cost. There is no free lunch. I’ve read this myth several times recently. Who is the source? Anger. Rage. I want to brain him!
In section #3, the opinion person(s) states that the European cap-and-trade experiment hasn’t worked and might never work because of a weak overlord (no EU-EPA) and lobbyists. This experience is then incorrectly transferred to the United States and a huge allocation option with cap-and-trade is ignored: auctioning of permits. For the most excellent analysis of cap-and-trade allocation schemes see the CBO’s.
In section #4, the opinion person(s) correctly state that a carbon tax is difficult politically and, again, incorrectly states that it is friendlier to consumers.
Let me be clear, I’m a fan of economic incentives. I would be delighted with implementation of a carbon tax or cap-and-trade to deal with climate change. Yet, I don’t see either as wildly superior to the other. Whenever someone advocates one as wildly superior to the other I grow suspicious (i.e., where’s my wallet). You should too.
Hat tip: Silent Bob.
CINQUANTASEI
https://www.env-econ.net/2007/01/stavins_on_the_.html
CINQUANTASETTE
https://www.env-econ.net/2009/09/carbon-taxes-vs-caps-one-more-time.html
Guest post from Jim Roumasset:
As Paul Krugman says, bad ideas are like New York cockroaches; you can flush them down, but they keep coming back. This is nowhere more the case than in the debate on carbon taxes vs. tradable permits.
Ci sentiamo dire che le tasse sul carbonio sono meglio perché generano più ricavi. Al contrario il cap and trade è da altri ritenuto migliore perché il suo scopo primario è controllare l’inqunamento, mentre lo scopo prioritario della carbon tax sarebbe quello di alzare i ricavi.
Per capire la differenza tra politiche o istituti diversi è spesso meglio partire con la stessa (Coase). Nel mondo della concorrenza perfetta, controllare le quantità coi prezzi (tassazione pigouviana) è esattamente uguale e cotrollare i prezzi con le quantità attraverso dei permessi trasferibili e messi all’asta. Questo resta vero anche se c’è incertezza sui costi dei danni marginali ma non sui benefici marginali delle emissioni (Weitzman, 1974). Per questa ragione il libro di testo tipico di economia ambientale enfatizza il caso dell’incertezza dei benefici marginali tenendo fissa la funzione di costo dei danni marginali. Il risultato di qeusto esercizio è che le tasse causano meno peso eccessivo rispetto ai permessi scambiabili atteso che la funzione dei costi dei danni marginali sia relativamente piatta in confronto alla funzione dei benefici marginali. Questo è probabilmente vero per il riscaldamento globale poiché le emissioni del singolo anno hanno un effetto relativamente piccolo sullo stock totale di carbonio e gli effetti futuri sono scontati. (Non so se è per questo che Nordhaus favorisce la tassa)
La prospettiva dell’equivalenza è utile anche per capire le implicazioni della scelta tra tassa e permessi riguardo ai ricavi. Nel mondo della certezza non ci sono implicazioni. Una tassa sulle emissioni è equivalente a mettere all’asta i permessi. Stessi prezzi, stesse quantità, stessi ricavi. Supponiamo invece che l’85% dei permessi siano regalati (Waxman Markey). Possiamo ottenere lo stesso risultato con una tassa? Sì. per semplicità supponiamo che ogni produttre ottenga l’85% della sua quantità efficiente di inquinamento gratis. La stessa cosa può essere ottenuta con una tassa che stabilisca che l’85% delle emissioni non siano tassate. Più le autorizzazioni per il cap and trade sono manipolate dalle lobby e più difficile sarà imitare lo schema attraverso le tasse, ma il principio è lo stesso. Cioè. Il cap and trade può essere disegnato per renderlo equivalente, riguardo ai ricavi, a una carbon tax e vicerversa. (Again, uncertainty about emission benefits throws this proposition off.)
Nel mondo reale, però, c’è incertezza sia sui costi che sui benefici. È possibile disegnare degli schemi ibridi che siano superiori sia alle tasse che ai permessi ma non abbiamo risultati forti sullo schema ibrido ottimale.
SESSANTUNO
https://www.env-econ.net/2008/10/here-we-go-agai.html
Ci sono dei pro e dei contro sia per il cap and trade che per la carbon tax.
Come rendere appetibile la tassa o il cap and trade al pubblico? Ambedue ottengono il risultato econoico desiderato: una riduzione nelle emissioni di anidride carbonica al livello ottimale socialmente al costo più basso per la società.
La tassa colpisce i danni esterni. Tassa chi danneggia al costo marginale per la società e alla fine avrai il livello ottimale di carbonio e il livello ottimale dei danni al minor costo. Però poi che dovrebbe fare il governo coi ricavi?
Da un punto di vista di efficienza economica ciò che il governo non dovrebbe fare è pagare le vittime in proporzione ai danni causati. Un rimborso proporzionale fa crescere l’incentivo a ricevere più danni. È un classico problema di azzardo morale. Pagare chi abita vicino a una fabbrica per i danni da inquinamento dipende da quanto vicino abitano. Più abiti vicino, più soldi dovresti ricevere. Che incentivo si crea? Spostati più vicino per ricevere più soldi. Così le persone si muovono più vicino alla fabbrica di quanto farebbero se i pagamenti fossero disaccoppiati rispetto ai danni.
Passiamo all’analisi normativa. Per ragioni di efficienza la maggior parte degli economisti vorrebbe redistribuire le entrate fiscali sotto forma di pagamento a somma fissa indipendente dai danni. L’incentivo della tassa a guidare meno, emettere meno o pagare di più se emetti di più resta, e la redistribuzione a somma fissa rende felici le persone che danno valore alla giusta redistribuzione. Tale trasferimento renderebbe la tassa meno regressiva se il reddito fosse correlato positivamente con le emissioni.
Il cap and trade può essere ridisegnato in modo tale da renderlo politicamente appetibile? Forse. Mettere all’asta interamente tutti i permessi col governo che prende tutti i ricavi riproduce la stessa situazione della tassa. Redistribuire le entrate in modo forfetario non crea l’azzardo morale. Quindi è possibile rendere il cap and trade equivalente a una tassa con ricavi redistribuiti forfetariamente ai cittadini. Quanto è probabile che il cap and trade ad asta totale venga implementato? Poco.
Per essere politicamente appetibile quasi ogni sistema di cap and trade deve includere alcuni permessi gratuiti allocati agli attuali emittenti (come il programma piogge acide anidride solforosa dell’EPA). Come verranno distribuiti tali permessi? Se la storia è un’indicazione, saranno distribuiti in modo proporzionale all’output passato di tutto ciò che produce le emissioni. Nel caso dell’anidride solforosa i permessi sono allocati come una porzione pro rata dell’elettricità prodotta in passato (in termini di kwh). Qualcosa di simile succederebbe probabilmente con i permessi di emissione in un sistema di cap and trade. Il governo potrebbe mettere all’asta alcuni permessi per coprire i costi amministrativi del programma, ma probabilmente non tutti i permessi saranno messi all’asta. Questo significa che il windfall del governo sarebbe più piccolo sotto il cap and trade che sotto una diretta carbon tax.
SESSANTADUE
Perché una carbon tax e non un sistema di cap and trade?
Una carbon tax è molto più semplice. Nel cap and trade una delle questioni è: come allocare i permessi per le emissioni? Un sistema basato sulle aste è molto simile a una carbon tax. Però in pratica le persone che scrivono le leggi spesso non mettono all’asta tutti i permessi e i politici iniziano a usare tali permessi per ricompensare politicamente qualcuno. Questo significa che tu stai prezzando il carbonio ma non hai i ricavi che puoi usare per ridurre le imposte alle persone.
Elon Musk sostiene che una carbon tax potrebbe catalizzare le industrie a tecnologia pulita e diventare un motore di creazione di lavoro.
Non vedo la carbon tax come un creatore di lavoro. Alcuni lavori saranno creati, altri saranno distrutti. Alcune industrie cresceranno, altre falliranno. Non ci sarà un boom economico a seguito della carbon tax.
- Elon Musk is an advocate of a carbon tax, with the idea that it could catalyze the cleantech industries, and possibly be a job-creation engine.
- Again, I wouldn’t push a carbon tax as a huge job creator. Some jobs will be created, some jobs will be destroyed. Some industries will grow, some industries will shrink. I don’t think the overall economy’s going to boom.
via grist.org
Preferenza della carbon tax sul cap and trade perché i politici regalano i permessi a chi vogliono loro. Questo significa confrontare una carbon tax ideale, senza esenzioni fiscali, con un cap and trade politiizzato. Una carbon tax potrebbe dare luogo a ricompense attraverso esenzioni fiscali.
Ok, una carbon tax non crea lavori.
SESSANTATRE
Dallas Burtraw and Anna Malinovskaya:
The EU Emissions Trading System (ETS) for carbon dioxide is the world’s largest greenhouse gas trading program in scope and the most important environmental market in the world. After a somewhat volatile start in 2005, the EU ETS underwent significant changes beginning with phase three, which runs from 2013 to 2020. Two major developments in particular buttressed the program and strengthened its influence: the centralization of the system under a single cap on emissions across the European Union (compared to earlier implementation at the member-state level, with national caps) and the system’s expansion to cover more nations (including three non-EU states), activities, and greenhouse gases.
The most important change, however, was a tremendous shift in the distribution of the asset value—constituting tens of billions of euros—created under the EU ETS via emissions allowances. We delve into the implications with colleagues in a recent RFF discussion paper. Before 2013, about 97 percent of emissions allowances, and thus the associated financial value, was distributed for free to incumbent firms, intended to help offset their compliance costs. But in many cases, that value was greater than the costs, leading to windfall profits. Auctions are now the default mechanism for the initial distribution of emissions allowances, making the initial and final distribution of the asset value more transparent. Since 2013, about half of the allowances are auctioned, with the asset value going to member state governments in the form of auction revenue.*
Although phase three marks an evolution likely to improve the EU ETS, challenges persist. In the past several years, the price of allowances and, consequently, the total asset value have fluctuated widely, falling dramatically at the beginning of phase three. Key reasons for the low prices include the use of international carbon credits for compliance with the EU ETS, poor projections of future industrial production, limited growth of the European economy in general, and subsidies to renewable energy. Several policy measures have been taken to stabilize the price, including “back-loading” efforts such as new rules on the use of international credits for compliance and a temporary delay in issuing some emissions allowances.
Regulators also implemented a structural change—the creation of a market stability reserve—which is expected to balance the supply and demand of emissions allowances on a regular basis. However, the introduction of a minimum price in the allowance auctions, which is a feature of the three North American trading programs, has not been embraced. Further, the most straightforward way to increase the price—to reduce the cap and thus the number of allowances available—has proven politically impossible, despite efforts in this direction.
What else has changed in phase three? In 2018, for the first time, the majority of the allowance value will be auctioned. Free allocation currently still accounts for about half of the total asset value due to concerns about the leakage of economic activity in trade-exposed industries to outside of the European Union. In phase three, harmonized system-wide rules based on product-specific emissions rate benchmarks are used to determine the allocation of emissions allowances to industry. Further, some industries deemed to be in trade-exposed sectors are included into the so-called carbon leakage list and receive their allowances for free. In addition to subsidizing industry through provisions to avoid carbon leakage, member states also have the opportunity to compensate industry for the indirect costs of compliance with the EU ETS. Yet we find little evidence that EU member states have used this opportunity to subsidize domestic industries, demonstrating an absence of strategic behavior.
The recent changes have made the EU ETS more comprehensive, transparent, and predictable. In July 2015, the European Commission presented a legislative proposal to further revise the system for the period after 2020. These future adjustments will determine whether the system will be an efficient policy instrument as it was intended to be and whether it continues contributing to important emissions reductions.
via www.rff.org
This may mitigate one of Mankiw’s favorite criticisms of cap-and-trade:
- Why a carbon tax and not a cap-and-trade system?
- A carbon tax is much simpler. In cap-and-trade, one of the issues becomes: how do you allocate those permits for carbon emissions? A fully auctioned cap-and-trade system is very, very close to a carbon tax. But in practice, people who write the bills often don’t auction [all the permits] off, and [politicians] start using these permits to start paying off particular constituencies politically. That means that you’re basically pricing carbon, but you don’t have the revenue that you can use to reduce people’s taxes.
Given the political process, most environmental policies are not without flaws when they are first implemented (yes, this would include the beloved carbon tax). Good environmental policy is usually the result of an evolutionary process. Economists often praise the market system for being flexible and government policy for being inflexible. Yet, here is an example of the flexibility of government (albeit, it took long enough!). The European Union seems to have a sincere policy goal of cutting carbon, tried to do so with cap-and-trade, made some mistakes and is now trying to fix those mistakes.
https://www.env-econ.net/2007/09/carbon-tax-vs-1.html
read my own required reading. First, I read Mankiw’s Economic View piece advocating a global carbon tax.
Mankiw (me):
- A tax would reduce carbon and mitigate climate change (yep, and so would cap-and-trade)
- A tax would raise revenue that can be used to reduce income taxes (in fact, the “double dividend” of a Pigovian tax is more general, the increased government revenue could be used for lots of things, such as covering the deficit instead of using social security taxes for that purpose.)
- A tax would be easier to negotiate internationally than cap-and-trade (maybe so, but I’d say the negotiations are significantly difficult that the difference in difficulty is minor; also, implementation of a carbon tax in the U.S. seems near impossible with the strong opposition from business)
As always in this debate, I’m blown away by the way economists pit a carbon tax against cap-and-trade as if it were an academic exercise (in graduate school it was the great macro debate “money matters, no it doesn’t”). The contrasts in the two approaches are presented as stark but this isn’t so. A carbon cap-and-trade system with an auction and safety value is similar to a carbon tax. It raises revenue and etc. Economists state this similarity and then ignore it and revert back to stating that a carbon tax is a much superior policy*.
Suppose we economists push for cap-and-trade in the power sector** with an initial giveaway of permits and a gradual ratcheting up of auctions? Since we are playing for keeps with Congress seemingly ready to implement cap-and-trade, playing the name game, i.e., gradually moving from cap-and-trade to a carbon tax might be one way to make all economists happy and actually get some sort of sensible climate legislation passed sometime soon.
Second, I read the WSJ piece. I found a balanced comparison of the economic issues with a clear statement that most of the differences in the two proposals are about distribution and not efficiency.
*The only really good reason to favor a carbon tax is the idea that regulating prices (i.e., taxes) works better with uncertain benefits.
**An increased gas tax, er, carbon tax on transportation, covers the other big carbon sector.
SESSANTANOVE
https://gregmankiw.blogspot.com/2007/08/fundamental-theorem-of-carbon-taxation.html
Un sistema di cap and trade è equivalente a una tassa sulle emissioni di CO2 con le entrate della tassa restistuite agli emittenti, come le imprese energetiche. Cioè cap and trade = carbon tax + corporate welfare. Quindi secondo alcuni il cap and trade sarebbe più agevolmente fattibile.
Se il pubblico capisse questo teorema, l’alternativa carbon tax con entrate restituite alle famiglie attreverso pagamenti diretti o minori imposte sul reddito attrarrebbe più interesse.
https://www.env-econ.net/2018/06/the-climes-they-are-a-changin.html
https://www.env-econ.net/2018/06/climate-change-is-the-car-alarm-of-the-2010s.html
https://www.env-econ.net/2018/08/just-like-coase-drew-it-up.html
https://www.env-econ.net/2018/12/the-aea-did-something-and-im-not-going-to-complain-about-it.html
The headline is likely an overstatement. Did emissions spike? Emissions in 2018 are still below the pre-Great Recession peak and below several years since the decline began (again, due to the Great Recession). There may be some sort of cyclical pattern here too. In other words, there have been three “spikes” since the peak. The most recent may be related to the 2018 tax cut. As that wears off we might get closer to the Copenhagen Accord target in 2019 and a recession in 2020 might really nail it.