Impact of Carbon Price Policies on U.S. Industry
AbstractThis paper informs the discussion of carbon price policies by examining the potential for adverse impacts on domestic industries, with a focus on detailed sector-level analysis. The assumed policy scenario involves a unilateral economy-wide $10/ton CO2 charge without accompanying border tax adjustments or other complementary policies. Four modeling approaches are developed as a proxy for the different time horizons over which firms can pass through added costs, change input mix, adopt new technologies, and reallocate capital. Overall, we find that a readily identifiable set of industries experience particularly adverse impacts as measured by reduced output and that the relative burdens on different industries are remarkably consistent across the four time horizons. Output rebounds considerably over longer time horizons, and the adverse impacts on profits diminish even more rapidly in most cases. Over the short term employment losses mirror output declines, while gains in other industries fully offset the losses over the longer horizons. At the same time, leakage abroad is considerable in some sectors, particularly when reductions in exports are considered.
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.
Bibliographic InfoPaper provided by Resources For the Future in its series Discussion Papers with number dp-08-37.
Date of creation: 15 Dec 2008
Date of revision:
carbon price; competitiveness; input-output analysis;
Find related papers by JEL classification:
- F14 - International Economics - - Trade - - - Empirical Studies of Trade
- D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis
- D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
- H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-01-03 (All new papers)
- NEP-ENE-2009-01-03 (Energy Economics)
- NEP-ENV-2009-01-03 (Environmental Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Aldy, Joseph E. & Pizer, William A., 2011.
"The Competitiveness Impacts of Climate Change Mitigation Policies,"
Working Paper Series
rwp11-047, Harvard University, John F. Kennedy School of Government.
- Aldy, Joseph Edgar & Pizer, William, 2011. "The Competitiveness Impacts of Climate Change Mitigation Policies," Scholarly Articles 5688779, Harvard Kennedy School of Government.
- Joseph E. Aldy & William A. Pizer, 2011. "The Competitiveness Impacts of Climate Change Mitigation Policies," NBER Working Papers 17705, National Bureau of Economic Research, Inc.
- Arik Levinson & M. Scott Taylor, 2004.
"Unmasking the Pollution Haven Effect,"
NBER Working Papers
10629, National Bureau of Economic Research, Inc.
- Carolyn Fischer & Richard D. Morgenstern, 2006.
"Carbon Abatement Costs: Why the Wide Range of Estimates?,"
The Energy Journal,
International Association for Energy Economics, vol. 0(Number 2), pages 73-86.
- Fischer, Carolyn & Morgenstern, Richard, 2003. "Carbon Abatement Costs: Why the Wide Range of Estimates?," Discussion Papers dp-03-42-rev, Resources For the Future.
- Michael Greenstone, 1998.
"The Impacts of Environmental Regulations on Industrial Activity: Evidence from the 1970 and 1977 Clean Air Act Amendments and the Census of Manufacturers,"
787, Princeton University, Department of Economics, Industrial Relations Section..
- Michael Greenstone, 2002. "The Impacts of Environmental Regulations on Industrial Activity: Evidence from the 1970 and 1977 Clean Air Act Amendments and the Census of Manufactures," Journal of Political Economy, University of Chicago Press, vol. 110(6), pages 1175-1219, December.
- Carolyn Fischer & Alan K. Fox, 2007. "Output-Based Allocation of Emissions Permits for Mitigating Tax and Trade Interactions," Land Economics, University of Wisconsin Press, vol. 83(4), pages 575-599.
- repec:clg:wpaper:2008-02 is not listed on IDEAS
- Babiker, Mustafa H., 2005. "Climate change policy, market structure, and carbon leakage," Journal of International Economics, Elsevier, vol. 65(2), pages 421-445, March.
- Morgenstern, Richard D. & Ho, Mun & Shih, J.-S.Jhih-Shyang & Zhang, Xuehua, 2004.
"The near-term impacts of carbon mitigation policies on manufacturing industries,"
Elsevier, vol. 32(16), pages 1825-1841, November.
- Morgenstern, Richard & Shih, Jhih-Shyang & Ho, Mun & Zhang, Xuehua, 2002. "The Near-Term Impacts of Carbon Mitigation Policies on Manufacturing Industries," Discussion Papers dp-02-06-, Resources For the Future.
- Aldy, Joseph E. & Krupnick, Alan J. & Newell, Richard G. & Parry, Ian W.H. & Pizer, William A., 2009.
"Designing Climate Mitigation Policy,"
dp-08-16, Resources For the Future.
- 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.
- Richard G. Newell & William A. Pizer & Daniel Raimi, 2013. "Carbon Markets 15 Years after Kyoto: Lessons Learned, New Challenges," Journal of Economic Perspectives, American Economic Association, vol. 27(1), pages 123-46, Winter.
- Fischer, Carolyn & Fox, Alan K., 2009. "Comparing Policies to Combat Emissions Leakage: Border Tax Adjustments versus Rebates," Discussion Papers dp-09-02, Resources For the Future.
- 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.
- 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.
- Adkins, Liwayway & Garbaccio, Richard & Ho, Mun & Moore, Eric & Morgenstern, Richard, 2012. "Carbon Pricing with Output-Based Subsidies: Impacts on U.S. Industries over Multiple Time Frames," Discussion Papers dp-12-27, Resources For the Future.
- 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.
- Monjon, Stéphanie & Quirion, Philippe, 2011.
"Addressing leakage in the EU ETS: Border adjustment or output-based allocation?,"
Elsevier, vol. 70(11), pages 1957-1971, September.
- Monjon, Stéphanie & Quirion, Philippe, 2011. "Addressing leakage in the EU ETS : Border adjustment or output-based allocation ?," Open Access publications from UniversitÃ© Paris-Dauphine urn:hdl:123456789/7346, Université Paris-Dauphine.
- Hepburn, Cameron J. & Quah, John K.-H. & Ritz, Robert A., 2013.
"Emissions trading with profit-neutral permit allocations,"
Journal of Public Economics,
Elsevier, vol. 98(C), pages 85-99.
- Cameron Hepburn & John Quah & Robert A. Ritz, 2008. "Emissions Trading with Profit-Neutral Permit Allocations," Economics Series Working Papers 2008-W12, University of Oxford, Department of Economics.
- Hepburn, C.J. & Quah, J.K.-H. & Ritz, R.A., 2012. "Emissions Trading with Profit-Neutral Permit Allocations," Cambridge Working Papers in Economics 1235, Faculty of Economics, University of Cambridge.
- Cameron Hepburn & John K.-H. Quah & Robert A. Ritz, 2008. "Emissions Trading with Profit-Neutral Permit Allocations," Economics Papers 2008-W12, Economics Group, Nuffield College, University of Oxford.
- Wang, Xin & Li, Ji Feng & Zhang, Ya Xiong, 2011. "An analysis on the short-term sectoral competitiveness impact of carbon tax in China," Energy Policy, Elsevier, vol. 39(7), pages 4144-4152, July.
- de Melo, Jaime & Mathys, Nicole Andréa, 2010. "Trade and Climate Change: The Challenges Ahead," CEPR Discussion Papers 8032, C.E.P.R. Discussion Papers.
- repec:old:wpaper:340 is not listed on IDEAS
- Christoph Böhringer & Jared C. Carbone & Thomas F. Rutherford, 2011.
"Embodied Carbon Tariffs,"
NBER Working Papers
17376, National Bureau of Economic Research, Inc.
- 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.
- Jones, Benjamin & Keen, Michael & Strand, Jon, 2012. "Fiscal implications of climate change," Policy Research Working Paper Series 5956, The World Bank.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Webmaster).
If references are entirely missing, you can add them using this form.