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on Resource Economics |
| By: | Rennert, Kevin (Resources for the Future); Ho, Mun (Resources for the Future); Nehrkorn, Katarina (Resources for the Future); Elkerbout, Milan (Resources for the Future) |
| Abstract: | Carbon–intensity-based border measures, in which a country imposes tariffs on imported goods according to their carbon emissions from each unit of production, have emerged as a key element of the trade and climate policy conversation in the United States and abroad. Proponents of such measures in the US Congress have cited multiple potential benefits, including supporting domestic competitiveness, reducing emissions in US-consumed goods, and reducing the emissions intensity of domestic manufacturing.There have been few detailed studies of the effects of US border measures based on carbon intensity, despite their current policy relevance and long history in the carbon pricing literature. In part, this is due to inherent challenges in the analysis of such border measures, including limited data on the carbon intensities of products worldwide, the complexity of trade relationships, and the myriad potential responses to such measures by actors throughout the global economy.Here, we use a global economic model to assess the effects of a border measure stylized after the Foreign Pollution Fee Act of 2025 (FPFA) introduced to the 119th Congress by Senators Bill Cassidy (R-LA) and Lindsey Graham (R-SC). The FPFA would impose tariffs on a set of covered products including iron and steel, aluminum, cement, glass, fertilizer, hydrogen, solar products, and long-duration storage, based on their relative carbon intensities compared to US production.We find that the FPFA would:Shift US imports toward countries with lower carbon intensity manufacturing: Imports for covered products are reduced from countries facing the carbon tariffs (e.g. China, Mexico, and India) and increase from countries exempt from the tariffs (e.g. the European Union, United Kingdom, and Japan) due to their lower carbon intensity of manufacturing for those products.Increase US manufacturing of covered products: The carbon tariffs protect US manufacturing of covered products, thereby raising their output: cement (+9.1 percent), aluminum (+7.9 percent), iron and steel (+7.4 percent), metal products (+3.7 percent).Raise revenue: Annual revenues from the policy are projected to be $2.8 billion (in 2024$) in the first year and total $33.3 billion over ten years.Have a minimal effect on global emissions: Changes in trade patterns and increased US manufacturing would reduce the embodied emissions of US imported goods, but reshuffling of global trade for covered products offsets the reduction of US imported emissions. US emissions increase due to greater domestic manufacturing. The net effect is that global emissions are relatively unchanged by the policy.Reduce output in downstream industries: Industries such as construction and transportation equipment manufacturing use covered products as inputs, exposing them to higher costs. US production from such downstream industries is projected to fall by 0.2–2 percent. |
| Date: | 2025–05–21 |
| URL: | https://d.repec.org/n?u=RePEc:rff:ibrief:ib-25-07 |
| By: | Clay, Karen (Carnegie Mellon University); Hernandez-Cortes, Danae (Arizona State University); Jha, Akshaya (Carnegie Mellon University); Lewis, Joshua (University of Montreal); Miller, Noah (University of Southern California); Severnini, Edson (Boston College) |
| Abstract: | This paper examines the relative contributions of siting decisions and post-siting demographic shifts to current disparities in exposure to polluting fossil-fuel plants in the United States. Our analysis leverages newly digitized data on power plant siting and operations from 1900-2020, combined with spatially resolved demographics and population data from the U.S Census from 1870-2020. We find little evidence that fossil-fuel plants were disproportionately sited in counties with higher Black population shares on average. However, event study estimates indicate that Black population share grows in the decades after the first fossil-fuel plant is built in a county, with average increases in Black population share of 4 percentage points in the 50-70 years after first siting. These long-run demographic shifts are driven by counties that first hosted a fossil-fuel plant between 1900-1949. We close by exploring how these long-run demographic shifts were shaped by the Great Migration, differential sorting in response to pollution, and other factors. Our findings highlight that the equity implications of siting long-lived infrastructure can differ dramatically depending on the time span considered. |
| Keywords: | environmental justice, fossil-fuel power plants, infrastructure siting, demographic shifts |
| JEL: | N52 N92 Q40 Q52 Q53 Q56 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18052 |
| By: | Roy, Nicholas (Resources for the Future); Palmer, Karen (Resources for the Future) |
| Abstract: | On June 11, 2025, the US Environmental Protection Agency (EPA) proposed a repeal of the existing Greenhouse Gas Standards and Guidelines for Fossil-Fired Power Plants, hereafter referred to as the Carbon Pollution Standards (CPS). EPA’s repeal is part of the new administration’s deregulatory agenda for the US power sector, whose stated goals are to lower costs and to meet rising electricity demand. The proposed repeal would lead to measurable changes in outcomes for the nation’s electric power sector, especially when assessed in conjunction with the One Big Beautiful Bill Act (OBBBA) and updated electricity demand forecasts.Policymakers and the public alike are paying attention to the action’s likely result of slowing US greenhouse gas emission reductions. In this issue brief, we consider the economic costs of the greenhouse gas emissions unabated due to this repeal and evaluate other costs and benefits for the US population from the proposed repeal using updated data.Indeed, according to our analysis: if the EPA conducted a cost-benefit analysis using updated electricity demand projections and including the electricity tax credit changes from the OBBBA, then the repeal of the CPS would fail a traditional cost-benefit test—even without factoring in the increase in greenhouse gas emissions.With the repeal of the CPS, US residents will likely see:Increases in coal generation of 169–456 TWh by 2040, or 4.8–8.7 times as much coal generation as was expected with the regulations in place.An increase in cumulative CO2 emissions from the power sector by 1.2–5.8 gigatons by 2050.A net increase of 2.1–3.3 percent annually in national average electricity prices from now to 2050. This combines the 1–1.4 percent decrease from CPS repeal with the OBBBA increases of 3.3–4.7 percent over the same period.Net increases in average net household electricity costs of $67–$97 per year in the 2030s, driven by the CPS’s decreases of $19–$24 annually and the OBBBA’s increases of $87–$121 annually over the same time period. However, CPS repeal savings for households increase in the 2040s to $34–$44 annually on average per household over the decade due to coal plants remaining online.Increases in health damages that exceed the savings from lower compliance costs. The climate and health damages from this regulatory repeal will be 4–8 times the savings from reduced compliance costs across the modeled sensitivities. Considering solely the health effects along with the power sector’s financial outcomes, there is a total net cost of $128.9 billion (2024 US dollars) through 2050 to US society in our central case. |
| Date: | 2025–08–06 |
| URL: | https://d.repec.org/n?u=RePEc:rff:ibrief:ib-25-10 |
| By: | Kakeu, Justin (Resources for the Future); Ziegler, Ethan (Resources for the Future); Holmes, Brandon (Resources for the Future) |
| Abstract: | Air pollution is the leading environmental cause of death and disease globally (Wright and Pant, 2024). In 2021, household and ambient air pollution was the second leading risk factor for premature death, killing over 8.1 million people (Health Effects Institute 2024). Even in an energy-intensive world, many of these deaths are avoidable and can be prevented through the proper understanding and regulation of pollutants.Although PM₂.₅ and ozone are considered to be the deadliest pollutants, there are hundreds of pollutants that can be harmful to human health (Ingram 2024). Currently, governmental bodies and policies take a fragmented approach to the research and regulation of these pollutants; different departments regulate different pollutants, and pollutants are studied and regulated independent of one another (Greenbaum and Shaikh 2010). This fragmentation in regulation includes cap-and-trade systems, which are used to manage the emissions of different pollutants such as CO₂, SO₂, and NO₂.This issue brief will explore the concept of implementing a multipollutant cap-and-trade program, as opposed to the traditional single-pollutant model. This system would provide heterogeneous firms with a variety of emission permits to choose from, each representing a specified bundle of pollutants. Such a model would allow governments to regulate the total amount of each pollutant emitted while simultaneously accounting for the effects of pollutant interactions. While this issue brief focuses on the potential for a multipollutant cap-and-trade model, it is important to note that cap and trade is not the only regulatory strategy available. Direct command-and-control regulations—such as setting specific technology standards or emission limits for pollutants—also provide a pragmatic starting point (Stavins 2004). In fact, given the technical and institutional complexities involved in multipollutant assessment, establishing robust command-and-control frameworks may serve as a foundation from which a transition to a market-based multipollutant cap-and-trade system could be built over time.This issue brief is associated with an accompanying working paper about the detailed structure of a multipollutant permit model (Kakeu 2025). Despite the technical and institutional barriers that have hindered the adoption of multipollutant regulations in recent history, there are many benefits associated with transitioning to multipollutant frameworks. This goes beyond replacing single-pollutant cap-and-trade systems with multipollutant ones; an overall restructuring of the methodologies, communication, research, and action on and about the health effects of air pollution to a more holistic perspective is imperative. |
| Date: | 2025–06–16 |
| URL: | https://d.repec.org/n?u=RePEc:rff:ibrief:ib-25-09 |
| By: | Roy, Nicholas (Resources for the Future); Burtraw, Dallas (Resources for the Future) |
| Abstract: | As recent events have shown, the impact of climate change on affordability for California households substantially dominates the cost of efforts to reduce greenhouse gas emissions. An important opportunity to mitigate emissions exists on natural and working lands. These investments also can improve the state’s resilience to the changing climate. These opportunities are not directly regulated under the carbon market because of the difficulty in monitoring and enforcing regulatory actions. Instead, the market directs investments through the offset program. A potential reform to the offsets program could yield additional hundreds of millions of dollars for the Greenhouse Gas Reduction Fund to drive further investments. |
| Date: | 2025–01–23 |
| URL: | https://d.repec.org/n?u=RePEc:rff:ibrief:ib-25-02 |