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The Near-Term Impacts of Carbon Mitigation Policies on Manufacturing Industries

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  • Morgenstern, Richard

    ()
    (Resources for the Future)

  • Shih, Jhih-Shyang

    ()
    (Resources for the Future)

  • Ho, Mun

    ()
    (Resources for the Future)

  • Zhang, Xuehua

Abstract

Who will pay for new policies to reduce carbon dioxide and other greenhouse gas emissions in the United States? This paper considers a slice of the question by examining the near-term impact on domestic manufacturing industries of both upstream (economy-wide) and downstream (electric power industry only) carbon mitigation policies. Detailed Census data on the electricity use of four-digit manufacturing industries is combined with input-output information on interindustry purchases to paint a detailed picture of carbon use, including effects on final demand. This approach, which freezes capital and other inputs at current levels and assumes that all costs are passed forward, yields upper-bound estimates of total costs. The results are best viewed as descriptive of the relative burdens within the manufacturing sector rather than as a measure of absolute costs. Overall, the principal conclusion is that within the manufacturing sector (which by definition excludes coal production and electricity generation), only a small number of industries would bear a disproportionate short-term burden of a carbon tax or similar policy. Not surprisingly, an electricity-only policy affects very different manufacturing industries than an economy-wide carbon tax.

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Bibliographic Info

Paper provided by Resources For the Future in its series Discussion Papers with number dp-02-06-.

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Date of creation: 01 Mar 2002
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Handle: RePEc:rff:dpaper:dp-02-06-

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Keywords: distribution of carbon mitigation costs; industrial impacts of carbon policies;

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  1. Ruth, Matthias & Davidsdottir, Brynhildur & Laitner, Skip, 2000. "Impacts of market-based climate change policies on the US pulp and paper industry," Energy Policy, Elsevier, vol. 28(4), pages 259-270, April.
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  3. Sanstad, Alan H. & DeCanio, Stephen J. & Boyd, Gale A. & Koomey, Jonathan G., 2001. "Estimating bounds on the economy-wide effects of the CEF policy scenarios," Energy Policy, Elsevier, vol. 29(14), pages 1299-1311, November.
  4. Koomey, Jonathan G. & Webber, Carrie A. & Atkinson, Celina S. & Nicholls, Andrew, 2001. "Addressing energy-related challenges for the US buildings sector: results from the clean energy futures study," Energy Policy, Elsevier, vol. 29(14), pages 1209-1221, November.
  5. Pizer, William & Morgenstern, Richard & Shih, Jhih-Shyang, 1998. "The Cost of Environmental Protection," Discussion Papers dp-98-36, Resources For the Future.
  6. Burtraw, Dallas & Palmer, Karen & Bharvirkar, Ranjit & Paul, Anthony, 2001. "The Effect of Allowance Allocation on the Cost of Carbon Emission Trading," Discussion Papers dp-01-30-, Resources For the Future.
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Cited by:
  1. Farrelly, Damien J. & Everard, Colm D. & Fagan, Colette C. & McDonnell, Kevin P., 2013. "Carbon sequestration and the role of biological carbon mitigation: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 21(C), pages 712-727.
  2. Parry, Ian, 2003. "Are Emissions Permits Regressive?," Discussion Papers dp-03-21, Resources For the Future.
  3. Bassi, Andrea M. & Yudken, Joel S. & Ruth, Matthias, 2009. "Climate policy impacts on the competitiveness of energy-intensive manufacturing sectors," Energy Policy, Elsevier, vol. 37(8), pages 3052-3060, August.
  4. Ho, Mun S. & Morgenstern, Richard & Shih, Jhih-Shyang, 2008. "Impact of Carbon Price Policies on U.S. Industry," Discussion Papers dp-08-37, Resources For the Future.
  5. Bartleet, Matthew & Iyer, Kris & Lawrence, Gillian & Numan-Parsons, Elisabeth & Stroombergen, Adolf, 2009. "Impact of emissions pricing on New Zealand manufacturing: A short-run analysis," Occasional Papers 10/2, Ministry of Economic Development, New Zealand.
  6. Liwayway Adkins & Richard Garbaccio & Mun Ho & Eric Moore & Richard Morgenstern, 2012. "Carbon Pricing with Output-Based Subsidies: Impacts on U.S. Industries over Multiple Time Frames," NCEE Working Paper Series 201203, National Center for Environmental Economics, U.S. Environmental Protection Agency, revised May 2012.
  7. Misato Sato & Karsten Neuhoff & Verena Graichen & Katja Schumacher & Felix Matthes, 2013. "Sectors under scrutiny – Evaluation of indicators to assess the risk of carbon leakage in the UK and Germany," Grantham Research Institute on Climate Change and the Environment Working Papers 113, Grantham Research Institute on Climate Change and the Environment.
  8. Eimear Leahy & Sean Lyons & Edgar L.W. Morgenroth & Richard S.J. Tol, . "The Spatial Incidence of a Carbon Tax in Ireland," Working Papers FNU-174, Research unit Sustainability and Global Change, Hamburg University.
  9. Corbett A. Grainger & Charles D. Kolstad, 2009. "Who Pays a Price on Carbon?," NBER Working Papers 15239, National Bureau of Economic Research, Inc.
  10. Kerkhof, Annemarie C. & Moll, Henri C. & Drissen, Eric & Wilting, Harry C., 2008. "Taxation of multiple greenhouse gases and the effects on income distribution: A case study of the Netherlands," Ecological Economics, Elsevier, vol. 67(2), pages 318-326, September.
  11. Sugino, Makoto & Arimura, Toshi H. & Morgenstern, Richard, 2012. "The Impact on Japanese Industry of Alternative Carbon Mitigation Policies," Discussion Papers dp-12-17, Resources For the Future.
  12. Sugino, Makoto & Arimura, Toshi H. & Morgenstern, Richard D., 2013. "The effects of alternative carbon mitigation policies on Japanese industries," Energy Policy, Elsevier, vol. 62(C), pages 1254-1267.
  13. Adkins, Liwayway & Garbaccio, Richard & Ho, Mun & Moore, Eric & Morgenstern, Richard, 2010. "The Impact on U.S. Industries of Carbon Prices with Output-Based Rebates over Multiple Time Frames," Discussion Papers dp-10-47, Resources For the Future.
  14. Santamaría, Alberto & Linares, Pedro & Pintos, Pablo, 2014. "The effects of carbon prices and anti-leakage policies on selected industrial sectors in Spain – Cement, steel and oil refining," Energy Policy, Elsevier, vol. 65(C), pages 708-717.
  15. Skelton, Alexandra C.H. & Allwood, Julian M., 2013. "The incentives for supply chain collaboration to improve material efficiency in the use of steel: An analysis using input output techniques," Ecological Economics, Elsevier, vol. 89(C), pages 33-42.
  16. Choi, Jun-Ki & Bakshi, Bhavik R. & Haab, Timothy, 2010. "Effects of a carbon price in the U.S. on economic sectors, resource use, and emissions: An input-output approach," Energy Policy, Elsevier, vol. 38(7), pages 3527-3536, July.
  17. Bassi, Andrea M. & Yudken, Joel S., 2011. "Climate policy and energy-intensive manufacturing: A comprehensive analysis of the effectiveness of cost mitigation provisions in the American Energy and Security Act of 2009," Energy Policy, Elsevier, vol. 39(9), pages 4920-4931, September.

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