Efficiency and Sectoral Distributional Impacts of Output-Based Emissions Allowances in Canada
AbstractEmissions trading with output-based allocation (OBA) of emissions allowances is gaining popularity as a mean to address sectoral distribution issues related to the use of market-based instruments in pollution control. Using a dynamic general equilibrium framework, this paper assesses the potential trade-off between efficiency and uneven sectoral distributional effects. It compares OBA and other alternative emissions trading systems, with special attention to the heterogeneity among energy-intensive industries. Because abatement is achieved at a higher marginal cost with OBA, it is less efficient than emissions trading systems in which permit revenues are used to reduce payroll taxes. Nonetheless, the implicit output subsidy in OBA improves the sectoral distributional outcome of the abatement policy to the benefit of energy-intensive industries as a whole. The simulation results also suggest that energy-intensive industries that do not produce energy are the main beneficiaries of OBA. In the new carbon-constrained environment, energy intensive industries that produce energy could not benefit from OBA.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by De Gruyter in its journal The B.E. Journal of Economic Analysis & Policy.
Volume (Year): 5 (2006)
Issue (Month): 1 (September)
Contact details of provider:
Web page: http://www.degruyter.com
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Dissou, Yazid & Eyland, Terry, 2011. "Carbon control policies, competitiveness, and border tax adjustments," Energy Economics, Elsevier, vol. 33(3), pages 556-564, May.
- Araar, Abdelkrim & Dissou, Yazid & Duclos, Jean-Yves, 2011.
"Household incidence of pollution control policies: A robust welfare analysis using general equilibrium effects,"
Journal of Environmental Economics and Management,
Elsevier, vol. 61(2), pages 227-243, March.
- Abdelkrim Araar & Yazid Dissou & Jean-Yves Duclos, 2008. "Household Incidence of Pollution Control Policies: A Robust Welfare Analysis Using General Equilibrium Effects," Working Papers 0805E, University of Ottawa, Department of Economics.
- Abdelkrim Araar & Yazid Dissou & Jean-Yves Duclos, 2008. "Household Incidence of Pollution Control Policies: a Robust Welfare Analysis Using General Equilibrium Effects," Cahiers de recherche 0809, CIRPEE.
- Takeda, Shiro & Arimura, Toshi H. & Tamechika, Hanae & Fischer, Carolyn & Fox, Alan K., 2011. "Output-Based Allocation of Emissions Permits for Mitigating the Leakage and Competitiveness Issues for the Japanese Economy," Discussion Papers dp-11-40, Resources For the Future.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Peter Golla).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.