Abstract:

Carbon mitigation policies typically exploit multiple instruments like taxes and tradeable pemits. Design characteristics are important for the impact of instruments, but even more so if they are combined in a package. Instruments usually apply to different agents, regulatory bases and are implemented at different strictness levels. We discuss under which conditions alternative taxes (emission, input taxes, output taxes) or a mix of them are more effective and efficient to correct pollution externalities in a model with administrative costs. We pay specific attention to exempting certain sectors from certain taxes that would be required in a first-best setting. In particular we discuss whether only upstream sectors or only downstream sectors need to be taxed. We relate our outcomes to the Pigouvian approach, the tax-interaction/double-dividend perspective, and the lifecycle analysis approach to environmental taxes. Furthermore, we apply this theoretical framework to the inventory of existing corrective carbon instruments and their mapping in the quantity-price (QP) space of emissions to provide a framework to discuss the coherence of policy mixes. Our focus is on pricing instruments of CO2-emissions and their linage to fossil fuel energy use. We demonstrate the usefulness of our approach for policy makers using the fossil fuel energy subsidy case of the Netherlands. 

About the SEEMS Seminars

Over the past years the number of researchers at UvA Economics & Business that work on Environmental Economics and Sustainability has increased significantly. To provide a natural meeting place for them, we have started a series of Seminars on Environmental Economics and Management of Sustainability (SEEMS).

The series’ first main goal is to increase the visibility of Environmental Economics and the Management of Sustainability at UvA and the visibility of UvA within these fields. Its second main goal is to give PhD candidates working on topics in these fields access to the frontier of knowledge, and to provide them with a training ground where they can present and discuss their ideas.

Are you interested?

This will be a hybrid seminar. If you are interested in joining this seminar, please send an email to the secretariat of ASF at asf-feb@uva.nl.