IDEAS home Printed from https://ideas.repec.org/p/zbw/ifwkwp/1380.html
   My bibliography  Save this paper

Distribution matters: Taxes vs. emissions trading in post Kyoto climate regimes

Author

Listed:
  • Peterson, Sonja
  • Klepper, Gernot

Abstract

The policy instruments for emissions reductions will be an integral part of a Post Kyoto Climate Regime. In this paper we compare a harmonized international carbon tax to a cap and trade system with different allocation rules for the emission caps. The caps are based either on the requirement for equal percentage reductions in all countries or the "contraction and convergence" proposal that leads to converging per capita emission rights. The quantitative analysis is based on simulations with the CGE model DART. The harmonized carbon tax tends to favor industrialized countries but is less favorable to developing countries. The welfare effects of a cap and trade system depend crucially on the allocation rule for emission rights. The "contraction and convergence" approach leads to welfare gains for countries like China, India and Subsaharan Africa whereas it imposes welfare losses upon industrialized countries which are larger than those under other cap and trade schemes or a tax scenario. Independent from the allocation rule that is used regions exporting fossil fuels experience strong welfare losses from the reduction in the demand for fossil fuels and the fall in prices that results from the imposition of the international climate policies.

Suggested Citation

  • Peterson, Sonja & Klepper, Gernot, 2007. "Distribution matters: Taxes vs. emissions trading in post Kyoto climate regimes," Kiel Working Papers 1380, Kiel Institute for the World Economy (IfW Kiel).
  • Handle: RePEc:zbw:ifwkwp:1380
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/4076/1/kap1380.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Buchner, Barbara & Carraro, Carlo, 2005. "Modelling climate policy: Perspectives on future negotiations," Journal of Policy Modeling, Elsevier, vol. 27(6), pages 711-732, September.
    2. den Elzen, Michel & Lucas, Paul & Vuuren, Detlef van, 2005. "Abatement costs of post-Kyoto climate regimes," Energy Policy, Elsevier, vol. 33(16), pages 2138-2151, November.
    3. Bohringer, Christoph & Welsch, Heinz, 2004. "Contraction and Convergence of carbon emissions: an intertemporal multi-region CGE analysis," Journal of Policy Modeling, Elsevier, vol. 26(1), pages 21-39, January.
    4. Klepper, Gernot & Peterson, Sonja & Springer, Katrin, 2003. "DART97: a description of the multi-regional, multi-sectoral trade model for the analysis of climate policies," Kiel Working Papers 1149, Kiel Institute for the World Economy (IfW Kiel).
    5. Klepper, Gernot & Peterson, Sonja, 2006. "Marginal abatement cost curves in general equilibrium: The influence of world energy prices," Resource and Energy Economics, Elsevier, vol. 28(1), pages 1-23, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hübler, Michael, 2012. "Carbon tariffs on Chinese exports: Emissions reduction, threat, or farce?," Energy Policy, Elsevier, vol. 50(C), pages 315-327.
    2. Ekholm, Tommi & Soimakallio, Sampo & Moltmann, Sara & Höhne, Niklas & Syri, Sanna & Savolainen, Ilkka, 2010. "Effort sharing in ambitious, global climate change mitigation scenarios," Energy Policy, Elsevier, vol. 38(4), pages 1797-1810, April.
    3. Peterson, Everett B. & Schleich, Joachim & Duscha, Vicki, 2011. "Environmental and economic effects of the Copenhagen pledges and more ambitious emission reduction targets," Energy Policy, Elsevier, vol. 39(6), pages 3697-3708, June.
    4. Niklas H�hne & Michel den Elzen & Donovan Escalante, 2014. "Regional GHG reduction targets based on effort sharing: a comparison of studies," Climate Policy, Taylor & Francis Journals, vol. 14(1), pages 122-147, January.
    5. Weitzel, Matthias, 2014. "Worse off from reduced cost? The role of policy design under uncertain technological advancement," Kiel Working Papers 1926, Kiel Institute for the World Economy (IfW Kiel).
    6. Hübler, Michael, 2009. "Can carbon based import tariffs effectively reduce carbon emissions?," Kiel Working Papers 1565, Kiel Institute for the World Economy (IfW Kiel).
    7. Wachsmuth, Jakob & Denishchenkova, Alexandra & Fekete, Hanna & Parra, Paola & Schaeffer, Michiel & Ancygier, Andrzej & Sferra, Fabio, 2019. "Fairness- and cost-effectiveness-based approaches to effort-sharing under the Paris agreement," Working Papers "Sustainability and Innovation" S04/2019, Fraunhofer Institute for Systems and Innovation Research (ISI).
    8. Peterson, Sonja & Weitzel, Matthias, 2014. "Reaching a climate agreement: Do we have to compensate for energy market effects of climate policy?," Kiel Working Papers 1965, Kiel Institute for the World Economy (IfW Kiel).
    9. Pan, Xunzhang & Teng, Fei & Ha, Yuejiao & Wang, Gehua, 2014. "Equitable Access to Sustainable Development: Based on the comparative study of carbon emission rights allocation schemes," Applied Energy, Elsevier, vol. 130(C), pages 632-640.
    10. Thomas Eichner & Rüdiger Pethig, 2009. "Taxing and trading carbon emissions in the EU: Distributional comparisons of mixed policies," Volkswirtschaftliche Diskussionsbeiträge 135-09, Universität Siegen, Fakultät Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht.
    11. Rojas-Romagosa, Hugo, 2010. "Wage inequality in trade-in-tasks models," Conference papers 331923, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    12. Siebert, Horst, 2008. "Rules for the global environment," Kiel Working Papers 1422, Kiel Institute for the World Economy (IfW Kiel).
    13. van Ruijven, Bas J. & Weitzel, Matthias & den Elzen, Michel G.J. & Hof, Andries F. & van Vuuren, Detlef P. & Peterson, Sonja & Narita, Daiju, 2012. "Emission allowances and mitigation costs of China and India resulting from different effort-sharing approaches," Energy Policy, Elsevier, vol. 46(C), pages 116-134.
    14. Matthias Weitzel, 2017. "Who gains from technological advancement? The role of policy design when cost development for key abatement technologies is uncertain," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 19(1), pages 151-181, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Heitmann, Nadine & Peterson, Sonja, 2012. "The potential contribution of the shipping sector to an efficient reduction of global carbon dioxide emissions," Kiel Working Papers 1813, Kiel Institute for the World Economy (IfW Kiel).
    2. Badau, Flavius & Färe, Rolf & Gopinath, Munisamy, 2016. "Global resilience to climate change: Examining global economic and environmental performance resulting from a global carbon dioxide market," Resource and Energy Economics, Elsevier, vol. 45(C), pages 46-64.
    3. Hübler, Michael, 2011. "Technology diffusion under contraction and convergence: A CGE analysis of China," Energy Economics, Elsevier, vol. 33(1), pages 131-142, January.
    4. Di Vita, Giuseppe, 2008. "Is the discount rate relevant in explaining the Environmental Kuznets Curve?," Journal of Policy Modeling, Elsevier, vol. 30(2), pages 191-207.
    5. Rickels, Wilfried & Rehdanz, Katrin & Oschlies, Andreas, 2012. "Economic prospects of ocean iron fertilization in an international carbon market," Resource and Energy Economics, Elsevier, vol. 34(1), pages 129-150.
    6. Zhou, P. & Wang, M., 2016. "Carbon dioxide emissions allocation: A review," Ecological Economics, Elsevier, vol. 125(C), pages 47-59.
    7. Van den Bergh, Kenneth & Delarue, Erik, 2015. "Quantifying CO2 abatement costs in the power sector," Energy Policy, Elsevier, vol. 80(C), pages 88-97.
    8. Pan, Xunzhang & Teng, Fei & Ha, Yuejiao & Wang, Gehua, 2014. "Equitable Access to Sustainable Development: Based on the comparative study of carbon emission rights allocation schemes," Applied Energy, Elsevier, vol. 130(C), pages 632-640.
    9. Yu, Shiwei & Wei, Yi-Ming & Wang, Ke, 2014. "Provincial allocation of carbon emission reduction targets in China: An approach based on improved fuzzy cluster and Shapley value decomposition," Energy Policy, Elsevier, vol. 66(C), pages 630-644.
    10. van Ruijven, Bas J. & Weitzel, Matthias & den Elzen, Michel G.J. & Hof, Andries F. & van Vuuren, Detlef P. & Peterson, Sonja & Narita, Daiju, 2012. "Emission allowances and mitigation costs of China and India resulting from different effort-sharing approaches," Energy Policy, Elsevier, vol. 46(C), pages 116-134.
    11. Ekholm, Tommi & Soimakallio, Sampo & Moltmann, Sara & Höhne, Niklas & Syri, Sanna & Savolainen, Ilkka, 2010. "Effort sharing in ambitious, global climate change mitigation scenarios," Energy Policy, Elsevier, vol. 38(4), pages 1797-1810, April.
    12. Weitzel, Matthias, 2014. "Worse off from reduced cost? The role of policy design under uncertain technological advancement," Kiel Working Papers 1926, Kiel Institute for the World Economy (IfW Kiel).
    13. Pan, Xunzhang & Teng, Fei & Wang, Gehua, 2014. "Sharing emission space at an equitable basis: Allocation scheme based on the equal cumulative emission per capita principle," Applied Energy, Elsevier, vol. 113(C), pages 1810-1818.
    14. Matthias Weitzel, 2017. "Who gains from technological advancement? The role of policy design when cost development for key abatement technologies is uncertain," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 19(1), pages 151-181, January.
    15. Liu, Yu & Tan, Xiu-Jie & Yu, Yang & Qi, Shao-Zhou, 2017. "Assessment of impacts of Hubei Pilot emission trading schemes in China – A CGE-analysis using TermCO2 model," Applied Energy, Elsevier, vol. 189(C), pages 762-769.
    16. Chen Shi & Yujiao Xian & Zhixin Wang & Ke Wang, 2023. "Marginal abatement cost curve of carbon emissions in China: a functional data analysis," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 28(2), pages 1-25, February.
    17. John Foster & Liam Wagner & Phil Wild & Junhua Zhao & Lucas Skoofa & Craig Froome, 2011. "Market and Economic Modelling of the Intelligent Grid: End of Year Report 2009," Energy Economics and Management Group Working Papers 09, School of Economics, University of Queensland, Australia.
    18. Delarue, E.D. & Ellerman, A.D. & D'haeseleer, W.D., 2010. "Robust MACCs? The topography of abatement by fuel switching in the European power sector," Energy, Elsevier, vol. 35(3), pages 1465-1475.
    19. Argueyrolles, Robin & Delzeit, Ruth, 2022. "The interconnections between Fossil Fuel Subsidy Reforms and biofuels," Conference papers 333492, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    20. Lehmann, Paul, 2010. "Combining emissions trading and emissions taxes in a multi-objective world," UFZ Discussion Papers 4/2010, Helmholtz Centre for Environmental Research (UFZ), Division of Social Sciences (ÖKUS).

    More about this item

    Keywords

    Emission targets; Emission trading; Taxes; Distribution; Post Kyoto;
    All these keywords.

    JEL classification:

    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:ifwkwp:1380. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/iwkiede.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.