Economics Dictionary of ArgumentsHome
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| Carbon taxation: A carbon tax is a fee imposed on the burning of fossil fuels based on the amount of carbon dioxide they emit. It aims to reduce greenhouse gas emissions by making polluters pay for the environmental cost, encouraging businesses and individuals to shift toward cleaner energy sources. See also Taxation, Corbon pricing, Emission permits, Emissions trading, Emissions._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Robert N. Stavins on Carbon Taxation - Dictionary of Arguments
Stavins I 155 Carbon Taxation/Aldy/Stavins: In principle, the simplest approach to carbon pricing would be through government imposition of a carbon tax (Metcalf, 2007)(1). The government could set a tax in terms of dollars per ton of CO2 emissions (or CO2-equivalent on greenhouse gas emissions) by sources covered by the tax, or—more likely—a tax on the carbon content of the three fossil fuels (coal, petroleum, and natural gas) as they enter the economy. Over time, an efficient carbon tax would increase to reflect the fact that as more greenhouse gas emissions accumulate in the atmosphere, the greater is the incremental damage from one more ton of CO2. Imposing a carbon tax would provide certainty about the marginal cost of compliance, which reduces uncertainty about returns to investment decisions, but would leave uncertain economy-wide emission levels (Weitzman, 1974)(2). The government could apply the carbon tax at a variety of points in the product cycle of fossil fuels, from fossil fuel suppliers based on the carbon content of fuel sales (“upstream” taxation/regulation) to final emitters at the point of energy generation (“downstream” taxation/regulation). A carbon tax would be administratively simple and straightforward to implement in most industrialized countries, since the tax could incorporate existing methods for fuel-supply monitoring and reporting to the regulatory authority. Some developing countries with effective tax systems, including monitoring and enforcement regimes to minimize tax evasion, could also implement carbon taxes in a relatively straightforward manner. Stavins I 156 The effects of a carbon tax on emission mitigation and the economy will depend in part on the amount and use of the tax revenue. The carbon tax revenue could be put toward a variety of uses (cf. >Carbon Taxation Strategies/Fankhauser). VsCarbon Taxation: The implementation of a carbon tax (or any other meaningful climate policy instrument) will increase the cost of consuming energy and could adversely affect the competitiveness of energy-intensive industries. This competitiveness effect can result in negative economic and environmental outcomes: firms may relocate facilities to countries without meaningful climate change policies, thereby increasing emissions in these new locations and offsetting some of the environmental benefits of the policy. Additional emission leakage may occur through international energy markets—as countries with climate policies reduce their consumption of fossil fuels and drive down fuel prices, those countries without emission mitigation policies increase their fuel consumption in response to the lower prices. Since leakage undermines the environmental effectiveness of any unilateral effort to mitigate emissions, international cooperation and coordination becomes all the more important. >Carbon Taxation/Geroe, >Carbon Taxation/Fankhauser, >Carbon Pricing/Stavins. Cf. >Emission permits, >Emission reduction credits, >Emission targets, >Emissions, >Emissions trading, >Climate change, >Climate damage, >Energy policy, >Clean Energy Standards, >Climate data, >Climate history, >Climate justice, >Climate periods, >Climate targets, >Climate impact research, >Carbon price, >Carbon price coordination, >Carbon price strategies, >Carbon tax, >Carbon tax strategies. 1. Metcalf, G. E. (2007). A proposal for a U.S. carbon tax swap (The Hamilton Project Discussion Paper 2007-12). Washington, DC: Brookings Institution. 2. Weitzman, M. L. (1974). Prices vs. quantities. The Review of Economic Studies, 41(4), 477–491. Robert N. Stavins & Joseph E. Aldy, 2012: “The Promise and Problems of Pricing Carbon: Theory and Experience”. In: Journal of Environment & Development, Vol. 21/2, pp. 152–180._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Stavins I Robert N. Stavins Joseph E. Aldy The Promise and Problems of Pricing Carbon: Theory and Experience 2012 |
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