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Publication Detail
Carbon taxes and carbon emissions trading
  • Publication Type:
    Journal article
  • Publication Sub Type:
    Review
  • Authors:
    Ekins P, Barker T
  • Publisher:
    BLACKWELL PUBL LTD
  • Publication date:
    07/2001
  • Pagination:
    325, 376
  • Journal:
    J ECON SURV
  • Volume:
    15
  • Issue:
    3
  • Print ISSN:
    0950-0804
  • Language:
    EN
  • Keywords:
    carbon taxes, carbon trading, double dividend, GENERAL EQUILIBRIUM-ANALYSIS, REDUCING CO2 EMISSIONS, UNITED-STATES, ENVIRONMENTAL TAXES, DIOXIDE EMISSIONS, FACTOR MARKETS, TAXATION, MODEL, ECONOMY, COST
  • Addresses:
    Univ Keele
    SPIRE
    Keele
    ST5 5BG
    Staffs
    England

    Univ Cambridge
    DAE
    Cambridge
    CB2 1TN
    England
Abstract
This paper surveys the literature on, and examples of current implementation of, carbon taxes and carbon emission permits. It sets out the theoretical basis for these instruments, with special reference to the revenue-recycling and tax interaction effects. This theoretical work concludes that instruments which raise revenue which can be recycled so as to reduce preexisting distortionary taxes are significantly less costly than those which do not. The paper then reviews the sizable literature on the distributional effects of these instruments, especially with regard to industrial competitiveness and regressive effects on low-income groups, evaluating attempts to mitigate these where they are perceived as unacceptable. The paper concludes that such efforts at mitigation, while possible, can substantially reduce the efficiency benefits of the instruments. The projected costs of carbon taxes depend on a wide range of assumptions. This is still a contested area, but the paper concludes that, on a range of plausible assumptions, these costs need not be high. Finally the paper notes that early evaluations of the environmental effectiveness of carbon taxes have been generally positive. This suggests that, if concern about anthropogenic climate change continues to increase, more countries will introduce carbon taxes and emission permits, with the latter increasingly auctioned.
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