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Are the Costs of Reducing Greenhouse Gases from Passenger Vehicles Negative?

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Author Info
Parry, Ian W.H. () (Resources for the Future)

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Abstract

Energy models suggest that the cost of reducing carbon emissions from the transportation sector is high relative to other sectors, such as electricity generation. However, this paper shows that taxes to reduce passenger vehicle emissions produce large net benefits, rather than costs, when account is taken of (a) their impact on reducing non-carbon externalities from passenger vehicle use, and (b) interactions with the broader fiscal system. Both of these considerations also strengthen the case for using a tax-based approach to reduce emissions over fuel economy regulation, while fiscal considerations strengthen the case for taxes over (non-auctioned) emissions permits.

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Paper provided by Resources For the Future in its series Discussion Papers with number dp-06-14-rev.

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Date of creation: 07 Dec 2006
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Handle: RePEc:rff:dpaper:dp-06-14-rev

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Related research
Keywords: carbon policies; passenger vehicles; externalities; welfare costs;

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Find related papers by JEL classification:
Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters
R48 - Urban, Rural, and Regional Economics - - Transportation Systems - - - Government Pricing; Regulatory Policies
H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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    Other versions:
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  11. Christiansen, Vidar, 1984. "Which commodity taxes should supplement the income tax?," Journal of Public Economics, Elsevier, vol. 24(2), pages 195-220, July. [Downloadable!] (restricted)
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    Other versions:
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