Intensity-based Rebating of Emissions Pricing Revenues

Christoph Böhringer, Carolyn Fischer and Nicholas Rivers
Additional contact information
Carolyn Fischer: Resources for the Future
Authors registered in the RePEc Author Service: Joshua Linn

No 21-37, RFF Working Paper Series from Resources for the Future

Abstract: Carbon pricing policies worldwide are increasingly coupled with direct or indirect subsidies where emissions pricing revenues are rebated to the regulated entities, particularly for emission-intensive and trade-exposed firms. We analyze the incentives created by two novel forms of rebating that reward additional emission intensity reductions: one given in proportion to output (intensity-based output rebating, IBOR) and another that rebates a share of emissions payments made (intensity-based emissions rebating, IBER). We contrast them with more common approaches like output-based rebating (OBR), abatement-based rebating (ABR), or lump-sum rebating (LSR). Comparing revenue-neutral schemes, given the same emissions price, IBOR incentivizes the most intensity reductions, while ABR incentivizes the most output reductions, and OBR puts the least pressure on output (and emissions); IBER lies in between by implicitly subsidizing emissions while incentivizing intensity reductions. We supplement partial equilibrium theoretical analysis with numerical simulations to assess the performance of different mechanisms in a multisector general equilibrium model that accounts for economy-wide market interactions and accommodates the trade-off analysis between overall economic efficiency and sectoral performance indicators such as output or emission intensity.

Date: 2022-01-05
New Economics Papers: this item is included in nep-des, nep-ene and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.rff.org/documents/3231/WP_21-37.pdf (application/pdf)

Related works:
Journal Article: Intensity-Based Rebating of Emission Pricing Revenues (2023)
Working Paper: Intensity-Based Rebating of Emission Pricing Revenues (2022)
Working Paper: Intensity-Based Rebating of Emission Pricing Revenues (2022)
Working Paper: Intensity-based rebating of emissions pricing revenues (2021)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:rff:dpaper:dp-21-37

Access Statistics for this paper

More papers in RFF Working Paper Series from Resources for the Future Contact information at EDIRC.
Bibliographic data for series maintained by Resources for the Future ().