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Greenhouse Gas Reduction Policy in the United States: Identifying Winners and Losers in an Expanded Permit Trading System

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  • Adam Rose
  • Gbadebo Oladosu

Abstract

We present an analysis of the economic impacts of marketable permits for greenhouse gas reduction across industries and income groups in the United States. A computable general equilibrium model is used to simulate permit markets under various assumptions about permit allocations, industry coverage, revenue recycling, sequestration, and the inclusion of multiple greenhouse gases. Our results indicate that a permit price of as much as $128 per ton carbon would be needed to comply with the full U.S. Kyoto commitment, and that this would lead to a slightly more than 1 percent reduction in GDP in the year 2010. Expansion of trading to include carbon sequestration and methane mitigation can significantly lower these impacts. However, all policy alternatives simulated are somewhat regressive in terms of income distribution, though to significantly different degrees depending on the policy design.

Suggested Citation

  • Adam Rose & Gbadebo Oladosu, 2002. "Greenhouse Gas Reduction Policy in the United States: Identifying Winners and Losers in an Expanded Permit Trading System," The Energy Journal, , vol. 23(1), pages 1-18, January.
    • Handle: RePEc:sae:enejou:v:23:y:2002:i:1:p:1-18
    DOI: 10.5547/ISSN0195-6574-EJ-Vol23-No1-1
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    References listed on IDEAS

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    1. William D. Nordhaus & Joseph G. Boyer, 1999. "Requiem for Kyoto: An Economic Analysis of the Kyoto Protocol," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 93-130.
    2. Adam Rose & Shih-Mo Lin, 1995. "Regrets or No Regrets -- That is the Question: Is Conservation an Costless CO2 Mitigation Strategy?," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 67-88.
    3. Alan S. Manne & Richard G. Richels, 1999. "The Kyoto Protocol: A Cost-Effective Strategy for Meeting Environmental Objectives?," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 1-23.
    4. Shoven,John B. & Whalley,John, 1992. "Applying General Equilibrium," Cambridge Books, Cambridge University Press, number 9780521266550, June.
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    Cited by:

    1. Marten, Alex, 2019. "The Importance of Source-Side Effects for the Incidence of Single Sector Technology Mandates and Vintage Differentiated Regulation," National Center for Environmental Economics-NCEE Working Papers 307895, United States Environmental Protection Agency (EPA).

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