IDEAS home Printed from https://ideas.repec.org/p/bcc/wpaper/2015-04.html

US climate policy: a critical assessment of intensity standards

Author

Listed:
  • Christoph Böhringer
  • Xaquin Garcia-Muros
  • Mikel Gonzalez-Eguino
  • Luis Rey

Abstract

Intensity standards have gained substantial momentum as a regulatory instrument in US climate policy. Energy-intensive and trade-exposed industries are traditionally opposed to initiatives for domestic carbon pricing as they are particularly vulnerable to competitiveness losses and refer to counterproductive emission leakage in a unilateral climate policy context. This has led to policy proposals where intensity standards on energy and carbon might at least in part substitute for explicit carbon pricing via taxes or emission allowances. In this paper we study the economic efficiency properties of intensity standards as an instrument of unilateral climate policy. We first develop a theoretical partial equilibrium framework and show that standards can have an ambiguous effect on carbon leakage. We then use an applied computable general equilibrium model of the global economy to gain quantitative insights into the effects of intensity standards for the case of the US. Our numerical results show that intensity standards may rather increase than decrease carbon leakage. Moreover, standards can lead to considerable welfare losses compared to uniform emission taxing. The tradability of standards across industries is a mechanism that can reduce these negative effects.

Suggested Citation

  • Christoph Böhringer & Xaquin Garcia-Muros & Mikel Gonzalez-Eguino & Luis Rey, 2015. "US climate policy: a critical assessment of intensity standards," Working Papers 2015-04, BC3.
    • Handle: RePEc:bcc:wpaper:2015-04
    as

    Download full text from publisher

    File URL: http://www.bc3research.org/index.php?option=com_wpapers&task=downpubli&iddoc=84&repec=1&Itemid=279
    Download Restriction: no
    ---><---

    Other versions of this item:

    Citations

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


    Cited by:

    1. is not listed on IDEAS
    2. Hirose, Kosuke & Matsumura, Toshihiro, 2020. "A comparison between emission intensity and emission cap regulations," Energy Policy, Elsevier, vol. 137(C).
    3. Lu, Yunguo & Zhang, Lin, 2022. "National mitigation policy and the competitiveness of Chinese firms," Energy Economics, Elsevier, vol. 109(C).
    4. Ino, Hiroaki & Matsumura, Toshihiro, 2021. "Optimality of emission pricing policies based on emission intensity targets under imperfect competition," Energy Economics, Elsevier, vol. 98(C).
    5. Ino, Hiroaki & Matsumura, Toshihiro, 2021. "Promoting green or restricting gray? An analysis of green portfolio standards," Economics Letters, Elsevier, vol. 198(C).
    6. Tang, Chang & Qi, Yu & Khan, Naqib Ullah & Tang, Ruwei & Xue, Yan, 2023. "Ultra-low emission standards and corporate production performance: Evidence from Chinese thermal power companies," Energy Policy, Elsevier, vol. 173(C).
    7. Limin Du & Zheng Wang & Zhaohua Xiao, 2024. "Command thy blessing from above: vertically delegated carbon reduction targets and firm export performance in China," Empirical Economics, Springer, vol. 67(6), pages 2643-2675, December.
    8. Hirose, Kosuke & Matsumura, Toshihiro, 2018. "An Advantage of Emission Intensity Regulation for Emission Cap Regulation in a Near-Zero Emission Industry," MPRA Paper 90134, University Library of Munich, Germany.
    9. Fleance George Cocker, 2025. "Mixes of Policy Instruments for the Full Decarbonisation of Energy Systems: A Review," Energies, MDPI, vol. 18(1), pages 1-64, January.
    10. Long, Xianling & Astier, Nicolas & Zhang, Da, 2025. "Is broader trading welfare improving for emission trading systems?," Journal of Environmental Economics and Management, Elsevier, vol. 130(C).

    More about this item

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • 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:bcc:wpaper:2015-04. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Sergio Henrique Faria (email available below). General contact details of provider: https://www.bc3research.org/ .

    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.