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Taxation of multiple greenhouse gases and the effects on income distribution: A case study of the Netherlands

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  • Kerkhof, Annemarie C.
  • Moll, Henri C.
  • Drissen, Eric
  • Wilting, Harry C.
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    Abstract

    Current economic instruments aimed at climate change mitigation focus on CO2 emissions only, but the Kyoto Protocol refers to other greenhouse gases (GHG) as well as CO2. These are CH4, N2O, HFCs, PFCs and SF6. Taxation of multiple greenhouse gases improves the cost-effectiveness of climate change mitigation. It is not yet clear, however, what the effect is of multigas taxation on the distribution of the tax burden across income groups. This paper examines and compares distributional effects of a CO2 tax and a comprehensive tax that covers all six GHG of the Kyoto Protocol. The study concentrates on the Netherlands in the year 2000. We established tax rates on the basis of marginal abatement cost curves and the Dutch policy target. The distributional effects have been determined by means of environmentally extended input-output analysis and data on consumer expenditures. Our results show that taxation of multiple GHG improves not only the cost-effectiveness of climate change mitigation, but also distributes the tax burden more equally across income groups as compared to a CO2 tax. These findings are relevant for the debate on the role of non-CO2 GHG in climate change mitigation.

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    Bibliographic Info

    Article provided by Elsevier in its journal Ecological Economics.

    Volume (Year): 67 (2008)
    Issue (Month): 2 (September)
    Pages: 318-326

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    Handle: RePEc:eee:ecolec:v:67:y:2008:i:2:p:318-326

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    Web page: http://www.elsevier.com/locate/ecolecon

    Related research

    Keywords: Climate change Non-CO2 greenhouse gases Taxation Income distribution Cost-effectiveness;

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    References

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    1. Ekins, Paul, 1999. "European environmental taxes and charges: recent experience, issues and trends," Ecological Economics, Elsevier, vol. 31(1), pages 39-62, October.
    2. Baranzini, Andrea & Goldemberg, Jose & Speck, Stefan, 2000. "A future for carbon taxes," Ecological Economics, Elsevier, vol. 32(3), pages 395-412, March.
    3. Elizabeth Symons & John Proops & Philip Gay, 1994. "Carbon taxes, consumer demand and carbon dioxide emissions: a simulation analysis for the UK," Fiscal Studies, Institute for Fiscal Studies, vol. 15(2), pages 19-43, May.
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    5. Cornwell, A. & Creedy, J., 1995. "CArbon Taxation, Prices and Inequality in Australia," Department of Economics - Working Papers Series 481, The University of Melbourne.
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    7. Labandeira, Xavier & Labeaga, Jose M., 2002. "Estimation and control of Spanish energy-related CO2 emissions: an input-output approach," Energy Policy, Elsevier, vol. 30(7), pages 597-611, June.
    8. Morgenstern, Richard D. & Ho, Mun & Shih, J.-S.Jhih-Shyang & Zhang, Xuehua, 2004. "The near-term impacts of carbon mitigation policies on manufacturing industries," Energy Policy, Elsevier, vol. 32(16), pages 1825-1841, November.
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    10. Speck, Stefan, 1999. "Energy and carbon taxes and their distributional implications," Energy Policy, Elsevier, vol. 27(11), pages 659-667, October.
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    Cited by:
    1. Labandeira, Xavier & Labeaga, José M. & Rodríguez, Miguel, 2009. "An integrated economic and distributional analysis of energy policies," Energy Policy, Elsevier, vol. 37(12), pages 5776-5786, December.
    2. James B. Davies & Xiaojun Shi & John Whalley, 2012. "The Possibilities for Global Inequality and Poverty Reduction Using Revenues from Global Carbon Pricing," University of Western Ontario, Economic Policy Research Institute Working Papers 20127, University of Western Ontario, Economic Policy Research Institute.
    3. Hussein, Zekarias & Golub, Alla A. & Hertel, Thomas W., 2012. "Climate Change Mitigation Policies and Global Poverty," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124689, Agricultural and Applied Economics Association.
    4. Dissou, Yazid & Siddiqui, Muhammad Shahid, 2014. "Can carbon taxes be progressive?," Energy Economics, Elsevier, vol. 42(C), pages 88-100.
    5. Corbett Grainger & Charles Kolstad, 2010. "Who Pays a Price on Carbon?," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 46(3), pages 359-376, July.
    6. Rao, Narasimha D., 2013. "Distributional impacts of climate change mitigation in Indian electricity: The influence of governance," Energy Policy, Elsevier, vol. 61(C), pages 1344-1356.
    7. Druckman, Angela & Chitnis, Mona & Sorrell, Steve & Jackson, Tim, 2011. "Missing carbon reductions? Exploring rebound and backfire effects in UK households," Energy Policy, Elsevier, vol. 39(6), pages 3572-3581, June.
    8. Kerkhof, Annemarie C. & Nonhebel, Sanderine & Moll, Henri C., 2009. "Relating the environmental impact of consumption to household expenditures: An input-output analysis," Ecological Economics, Elsevier, vol. 68(4), pages 1160-1170, February.
    9. Tim Callan & Sean Lyons & Sue Scott & Richard S. J. Tol & Stefano Verde, 2008. "The Distributional Implications of a Carbon Tax in Ireland," Papers WP250, Economic and Social Research Institute (ESRI).
    10. Pashardes, Panos & Pashourtidou, Nicoletta & Zachariadis, Theodoros, 2014. "Estimating welfare aspects of changes in energy prices from preference heterogeneity," Energy Economics, Elsevier, vol. 42(C), pages 58-66.
    11. Chen, Shiyi, 2013. "What is the potential impact of a taxation system reform on carbon abatement and industrial growth in China?," Economic Systems, Elsevier, vol. 37(3), pages 369-386.
    12. Xaquín Garcia-Muros & Mercedes Burguillo & Mikel Gonzalez-Eguino & Desiderio Romero-Jordán, 2014. "Local air pollution and global climate change taxes: a distributional analysis," Working Papers 2014-01, BC3.

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