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

  • Kerkhof, Annemarie C.
  • Moll, Henri C.
  • Drissen, Eric
  • Wilting, Harry C.
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    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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    File URL: http://www.sciencedirect.com/science/article/B6VDY-4RPKYNX-1/2/2d8ab9d04bbee641698f96044d98c79c
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    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
    Contact details of provider: Web page: http://www.elsevier.com/locate/ecolecon

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    1. Cornwell, A. & Creedy, J., 1995. "CArbon Taxation, Prices and Inequality in Australia," Department of Economics - Working Papers Series 481, The University of Melbourne.
    2. Ekins, Paul, 1999. "European environmental taxes and charges: recent experience, issues and trends," Ecological Economics, Elsevier, vol. 31(1), pages 39-62, October.
    3. Wier, Mette & Birr-Pedersen, Katja & Jacobsen, Henrik Klinge & Klok, Jacob, 2005. "Are CO2 taxes regressive? Evidence from the Danish experience," Ecological Economics, Elsevier, vol. 52(2), pages 239-251, January.
    4. John P. Weyant, Francisco C. de la Chesnaye, and Geoff J. Blanford, 2006. "Overview of EMF-21: Multigas Mitigation and Climate Policy," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 1-32.
    5. Speck, Stefan, 1999. "Energy and carbon taxes and their distributional implications," Energy Policy, Elsevier, vol. 27(11), pages 659-667, October.
    6. 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.
    7. Xavier Labandeira & José M. Labeaga, 1999. "Combining input-output analysis and micro-simulation to assess the effects of carbon taxation on Spanish households," Fiscal Studies, Institute for Fiscal Studies, vol. 20(3), pages 305-320, September.
    8. Baranzini, Andrea & Goldemberg, Jose & Speck, Stefan, 2000. "A future for carbon taxes," Ecological Economics, Elsevier, vol. 32(3), pages 395-412, March.
    9. 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.
    10. 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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