Emissions regulations like carbon pricing raise the price of covered sector goods and thus can interact with and exacerbate other preexisting distortions in the economy. One such distortion is labor taxes. Another is emissions "leakage" due to the lack of comparable emissions pricing abroad or among other emitting sectors at home. A potential response is to combine the emissions tax with a rebate to production to mitigate the price increases. We use an optimal tax framework to solve for the optimal emissions tax and output rebate, given these distortions. We then employ a multisector computable general equilibrium model based on the GTAP framework to simulate the effects of a $50 per-ton carbon tax on the major emissions-intensive sectors in the U.S. economy and estimate optimal rebates by sector.
Press Release — Apr 1, 2020
Major New Study Charts Course to Net Zero Industrial Emissions
Interdisciplinary team assesses technology and policy strategies for industrial decarbonization
Working Paper — Mar 31, 2020
Have US Fuel Economy and Greenhouse Gas Emissions Standards Improved Social Welfare?
This paper provides the first comprehensive social welfare estimates of recent fuel economy and greenhouse gas emissions standards.
Journal Article — Mar 29, 2020
Technologies and Policies to Decarbonize Global Industry: Review and Assessment of Mitigation Drivers through 2070
Fully decarbonizing global industry is essential to achieving climate stabilization, and reaching net zero greenhouse gas emissions by 2050–2070 is necessary to limit global warming to 2 °C. This paper assembles and evaluates technical and policy interventions, both on the supply side and on the demand side.