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US Climate Policy: A Critical Assessment of Intensity Standards

Author

Listed:
  • Christoph Böhringer

    (University of Oldenburg - Economic Policy; Centre for European Economic Research (ZEW))

  • Xaquín Garcia-Muros

    (Basque Centre for Climate Change (BC3), Students)

  • Mikel Gonzalez-Eguino

    (Basque Centre for Climate Change (BC3))

  • Luis Rey

    (Basque Centre for Climate Change (BC3))

Abstract

Intensity standards have gained substantial momentum as a regulatory instrument in US climate policy. Based on numerical simulations with a large-scale computable general equilibrium model we show that intensity standards may rather increase than decrease counterproductive carbon leakage. Moreover, standards can lead to considerable welfare losses compared to emission pricing via carbon taxation or an emissions trading system. The tradability of standards across industries is a mechanism that can reduce these negative effects.

Suggested Citation

  • Christoph Böhringer & Xaquín Garcia-Muros & Mikel Gonzalez-Eguino & Luis Rey, 2015. "US Climate Policy: A Critical Assessment of Intensity Standards," ZenTra Working Papers in Transnational Studies 61 / 2015, ZenTra - Center for Transnational Studies, revised Nov 2015.
    • Handle: RePEc:zen:wpaper:61
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    File URL: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2875298
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    Citations

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    Cited by:

    1. 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.
    2. 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).
    3. 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.
    4. 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).
    5. Lu, Yunguo & Zhang, Lin, 2022. "National mitigation policy and the competitiveness of Chinese firms," Energy Economics, Elsevier, vol. 109(C).
    6. Ino, Hiroaki & Matsumura, Toshihiro, 2021. "Optimality of emission pricing policies based on emission intensity targets under imperfect competition," Energy Economics, Elsevier, vol. 98(C).
    7. Hirose, Kosuke & Matsumura, Toshihiro, 2020. "A comparison between emission intensity and emission cap regulations," Energy Policy, Elsevier, vol. 137(C).
    8. Ino, Hiroaki & Matsumura, Toshihiro, 2021. "Promoting green or restricting gray? An analysis of green portfolio standards," Economics Letters, Elsevier, vol. 198(C).
    9. 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.

    More about this item

    Keywords

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    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

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