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
In response to the ongoing climate policy debates, this study examines the cost impacts of carbon-pricing legislation on selected US energy-intensive manufacturing industries. Specifically, it evaluates output-based rebate measures and the border adjustment provision specified in the bill, and tests the effectiveness of cost containment features of the policy, such as the international offsets, under various market assumptions. Results of the examination confirm that in all policy cases or industries, the output-based rebates would effectively mitigate the manufacturers' carbon-pricing costs in the short-to-medium term. However as the rebates decline after 2020, especially in a case where low-carbon electricity generation or international offsets are not readily available or implemented, these industries would suffer greater declines in profitability. At the same time, the study's findings were mixed concerning the effectiveness of the border adjustment measure in reducing cost impacts after 2020. While border adjustments could reduce costs to US manufacturing sectors, at least temporarily, they could create problems for domestic downstream producers and exports, under cost pass-along conditions. However at best, the output-based rebates, international offset, and border adjustment and measures primarily buy time for manufacturers. The only long-term solution is for EITE industries to invest in energy-saving and next-generation low-carbon technologies.
If 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.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
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.:
- S. Paltsev & J. Reilly & H. Jacoby & A. Gurgel & G. Metcalf & A. Sokolov & J. Holak, 2007.
"Assessment of U.S. Cap-and-Trade Proposals,"
0705, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research.
- Morgenstern, Richard & Shih, Jhih-Shyang & Ho, Mun & Zhang, Xuehua, 2002.
"The Near-Term Impacts of Carbon Mitigation Policies on Manufacturing Industries,"
dp-02-06-, Resources For the Future.
- 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.
- 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.
- 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.
- 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.
When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:39:y:2011:i:9:p:4920-4931. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.