nep-res New Economics Papers
on Resource Economics
Issue of 2012‒01‒25
four papers chosen by
Maximo Rossi
Universidad de la Republica

  1. Environmental Taxation and Redistribution Concerns By Rafael Aigner
  2. Market-based instruments for international aviation and shipping as a source of climate finance By Keen, Michael; Parry, Ian; Strand, Jon
  3. Do Flemish Households Value Renewables? By Pepermans, Guido
  4. Regulating Greenhouse Gases from Coal Power Plants under the Clean Air Act By Linn, Joshua; Mastrangelo, Erin; Burtraw, Dallas

  1. By: Rafael Aigner (Max Planck Institute for Research on Collective Goods, Bonn and University of Cologne)
    Abstract: This paper shows how the optimal level of Pigouvian taxation is influenced by distributive concerns. With second-best instruments, a higher level of income redistribution calls for a lower level of Pigouvian taxation. More redistributionimplies that tax collection via the income tax creates higher distortions, which in turn makes revenues from Pigouvian taxation more valuable. Contrary to naive intuition, this reduces the optimal level of Pigouvian taxation. The social planner trades off environmental tax revenues against the marginal social damage and accepts a lower tax if the welfare created per dollar is higher. The paper also shows that the relation between levels of redistribution and Pigouvian taxation is reversed in first-best. It thus highlights that second-best Pigouvian taxes are very different from their first-best counterpart – despite apparently identical first order conditions.
    Keywords: Optimal Income Taxation, Pigouvian taxation, comparative statics, externalities, second-best
    JEL: H21 D62 H23
    Date: 2011–07
  2. By: Keen, Michael; Parry, Ian; Strand, Jon
    Abstract: The international aviation and maritime sectors today enjoy relatively favorable tax treatment, as their fuels are not taxed and the sectors are not subject to any value-added tax or turnover tax. Nor are these fuel uses subject to any global measures to reduce their associated CO2 emissions, even though they represent at least 5 percent of the global greenhouse gas emissions. A carbon charge on fuels for international aviation and shipping equal to $25 per tonne of emitted CO2 could raise about $12 billion from aviation and about $26 billion from shipping by 2020. Market-based instruments ought to be used to raise such revenue, preferably charges based on the carbon contents of fuels. Such charges would also scale back emissions by at least 5-10 percent. Developing countries ought to be able to keep their own tax revenue, and additional compensation to them for the economic burdens of these carbon charges may be warranted. Such compensation would constitute at most 40 percent of the raised global revenue. Implementing these charges can be a challenge, especially for aviation, where a large number of bilateral air-service agreements would need to be rewritten.
    Keywords: Transport Economics Policy&Planning,Climate Change Economics,Climate Change Mitigation and Green House Gases,Environmental Economics&Policies,Energy Production and Transportation
    Date: 2012–01–01
  3. By: Pepermans, Guido (Hogeschool-Universiteit Brussel (HUB), Belgium)
    Abstract: This paper assesses whether and to what extent Flemish households are willing to pay for electricity generated with renewable resources. Via a choice experiment, households were offered the choice between as set of green electricity contracts, characterised by the renewables share in electricity supplied to their dwelling, the renewable generation technology (wind, biomass, PV...) and its impact on the electricity bill. A main effects conditional logit model and a main effects random parameter logit model are estimated. The estimation results show that households prefer ‘green contacts’, but renewables technologies are valued differently. The estimates are then used to assess the marginal willingness to pay by Flemish households for each of the contract attributes. From a policy perspective, the results suggest that a not too small proportion of Flemish households would be willing to switch to another power supply contract if that can be done at limited cost. Moreover, the results suggest that it would not be a good idea to focus on the deployment of one or only a few technologies. Policies resulting in a diversified portfolio of technologies are positively valued by households and will obtain broader support.
    Keywords: choice experiment; renewables; conditional logit model; random parameter logit model; willingness-to-pay
    JEL: C25 C93 D12 Q41
    Date: 2011–05
  4. By: Linn, Joshua (Resources for the Future); Mastrangelo, Erin; Burtraw, Dallas (Resources for the Future)
    Abstract: The Clean Air Act has assumed the central role in U.S. climate policy, directing the Environmental Protection Agency to develop regulations governing the emissions of greenhouse gases from existing coal-fired power plants. The cost and environmental effectiveness of policy options depend on abatement costs, the magnitude of emissions reduction opportunities, and the sensitivity of plant utilization. This paper examines the operation of electricity-generating units over 25 years to estimate the marginal costs and potential magnitude of emissions reductions that could result from improvements in their operating efficiency. We find that a 10 percent increase in coal prices causes a 0.3 to 0.9 percent heat rate reduction, broadly consistent with engineering assessments of abatement costs and opportunities. We also find that coal prices have a significant effect on utilization, but that will vary depending on the policy design. The results are used to compare cost-effectiveness of alternative policies.
    Keywords: efficiency, regulation, greenhouse gas, carbon dioxide, coal, performance standards
    JEL: L94 Q54
    Date: 2012–01–10

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