Monetary Carbon Values in Policy Appraisal

Smith, Stephen; Braathen, Nils Axel

doi:10.1787/5jrs8st3ngvh-en

Cited by 18 publications

(18 citation statements)

References 10 publications

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“…Other policies, such as regulations to limit SO 2 emissions by coal-fired generating stations and revenue-generating taxes on energy, have incidental effects on GHG emissions. Other policies can distort the impacts of an ETS (Schmalensee & Stavins, 2017) and make it difficult to assess the effectiveness of a carbon pricing instrument.…”

Section: Practical Designsmentioning

confidence: 99%

Carbon taxes and greenhouse gas emissions trading systems: what have we learned?

Haites

2018

Climate Policy

237

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Systematic evidence relating to the performance of carbon pricingcarbon taxes and greenhouse gas (GHG) emissions trading systems (ETSs)is sparse. In 2015, 17 ETSs were operational in 55 jurisdictions while 18 jurisdictions collected a carbon tax. The papers in this special thematic section review the performance of many of these instruments over the 2005-2015 period. The performance of existing carbon taxes and GHG ETSs can help policy makers make informed choices about whether to introduce these instruments and to improve their design. The purpose of carbon pricing instruments is to reduce GHG emissions cost effectively. Assessing their performance is difficult because emissions are also affected by other policies and exogenous factors such as economic conditions. Carbon taxes in Europe prior to 2008 and in British Columbia reduced emissions from business-as-usual but actual emissions continued to rise. Since 2008 emissions subject to European carbon taxes have declined, but in most countries, other mitigation policies have probably contributed more to the reductions than the carbon taxes. Emissions subject to ETSs, with the exception of four systems without emissions caps, have declined. The ETSs contributed to the emissions reductions, but their share of the overall reduction is not known. Most tax rates are low relative to levels thought to be needed to achieve climate change objectives. Few jurisdictions regularly adjust their tax rates. All ETSs have accumulated surplus allowances and implemented measures to reduce these surpluses. The largest ETSs now specify annual reductions in their emissions cap several years into the future. Emissions trading system allowance prices are generally lower than the tax rates.Key policy insights . Theoretical discussions usually portray carbon taxes and GHG ETSs as alternatives.In practice, a jurisdiction often implements both instruments to address emissions by different sources. . Designs of ETSs have evolved based on experience shared bilaterally and via dedicated institutions. . Carbon tax designs, in contrast, have hardly evolved and there are no institutions dedicated to sharing experience. . Every jurisdiction with an ETS and/or carbon tax also has other policies that affect its GHG emissions. ARTICLE HISTORYCarbon pricing can be implemented using either of two instrumentsa carbon tax or a GHG emissions trading system (ETS). With a tax, the government sets the tax rate and specifies the sources subject to the tax. The emission reduction achieved depends upon the response of the affected sources to the imposition of the tax. With an ETS the government sets a limit on GHG emissions by specified sources and distributes allowances approximately equal to the limit. 2 Allowances are tradable. Each source must surrender allowances equal to its actual emissions to the government. Emissions cannot exceed the limit, but the compliance cost depends on the market price of allowances.There is an extensive literature on the relative merits of these two instruments (e.g. Partnersh...

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Section: Practical Designsmentioning

confidence: 99%

Carbon taxes and greenhouse gas emissions trading systems: what have we learned?

Haites

2018

Climate Policy

237

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“…Moreover, comparing shadow prices and social cost estimates is difficult because estimations of social costs depend on the choice of the discount factor, CO 2 stock, and other parameters. For example, the social cost of one tonne of CO 2 in the US in 2010 varies between USD 10 and 84 (Interagency Working Group on Social Cost of Carbon, 2013), which is below our estimates of USA's CO 2 shadow prices equal to USD 185 in the same year (Smith and Braathen, 2015).…”

Section: Shadow Price Estimates In the Literaturementioning

confidence: 57%

Environmentally Adjusted Multifactor Productivity

2018

OECD Green Growth Papers

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“…To quantify non-climate external effects (not considered in the original study), this paper draws on Santos (2017 [21]) who provides 2008 emission estimates for France. One limitation of her analysis is that she reports country-level average damage estimates, while these externalities tend to be significantly higher for urban road use than for rural road use (Van Dender, 2018[22]).…”

Section:  Cbas Should Not Be Limited To Considering Climate Externalmentioning

confidence: 99%

“…Figure 5 sums up the results of the preceding analysis. 21 The 2008 feebate does indeed appear to have decreased CO2 emissions, which is estimated to come with a social benefit of EUR 212 million. However, the additional road use caused negative non-climate externalities.…”

Section:  Cba Of Environmentally Related Tax Policies Should Not Solmentioning

confidence: 99%