Using Tax Expenditures to Achieve Energy Policy Goals
Tax expenditures are a major source of support for energy related to activities in the federal budget exceeding direct budget support for energy by a factor of nearly six. Focusing on the policy goals of reducing greenhouse gas emissions and petroleum consumption, I find these tax expenditures highly cost ineffective at best and counterproductive at worse. The tax credit for ethanol is an example of a cost ineffective subsidy. The cost of reducing CO2 emissions through this subsidy exceeded $1,700 per ton of CO2 avoided in 2006 and the cost of reducing oil consumption over $85 per barrel.
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- Gilbert E. Metcalf, 2006.
"Energy Conservation in the United States: Understanding its Role in Climate Policy,"
NBER Working Papers
12272, National Bureau of Economic Research, Inc.
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- Ian W. H. Parry & Kenneth A. Small, 2005.
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American Economic Association, vol. 95(4), pages 1276-1289, September.
- Parry, Ian & Small, Kenneth, 2002. "Does Britain or the United States Have the Right Gasoline Tax?," Discussion Papers dp-02-12-, Resources For the Future.
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