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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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    References listed on IDEAS

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    More about this item

    Keywords

    unilateral climate policy; carbon leakage; intensity standards; computable general equilibrium;

    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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