 Climate reform and transitional industry assistance: Windfall profits for polluters?Alastair Fraser, Jonathan Chiew Sheen Kuok and Gordon Leslie Energy Economics, 2023, vol. 121, issue C Abstract: Introducing climate change policies such as carbon pricing can bring substantial costs for fossil-fuel-fired electricity generators, with incumbents often granted a transitional allocation of free emission permits. The free allocation of emission permits and the pass-through of carbon prices to higher electricity prices has created substantial concern that these policies allow emissions-intensive firms to reap windfall profits. We use the implementation and later repeal of Australia’s price on carbon to show that coal-fired plants which received free permits had a substantial increase in their profits. This result supports calls for any transitional climate policy assistance to be tied to projected pass-through rates in order to avoid creating wealth transfers from taxpayers to emission-intensive generator owners. Keywords: Environmental taxes; Cost pass-through; Policy grandfathering; Electric utilities; Energy and environmental policy (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:121:y:2023:i:c:s0140988323001275 DOI: 10.1016/j.eneco.2023.106629 Access Statistics for this article Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant More articles in Energy Economics from Elsevier |
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