Economic impacts of reducing methane emissions in British Columbia’s oil and natural gas sectors: Taxes vs technology standards
Mallory Long,
Patrick Withey,
Dave Risk,
Van Lantz and
Chinmay Sharma
Resource and Energy Economics, 2024, vol. 76, issue C
Abstract:
As countries reduce greenhouse gas emissions to fight the potential impacts of climate change, increasing attention is being paid to methane, which is roughly 34 times more potent than CO2 over a 100-year time span. Governments in many jurisdictions aim to reduce methane by 45–75% in oil and gas sectors by 2030. Methane reductions are often achieved by implementing new technologies and operational techniques, but jurisdictions have discussed the implementation of a methane tax. While several studies have focused on the financial costs of reducing methane emissions through adopting new technologies, little information exists on the economy-wide impacts of these initiatives and the effectiveness of different policy tools. We develop a dynamic computable general equilibrium model for British Columbia, Canada, to evaluate the economy wide impacts of methane technology standards versus taxes. Findings indicate that methane can be reduced by 75% by 2030 using technology standards at a loss of 0.0089% of GDP in 2030. Impacts associated with a methane tax will range from a loss of 0.0071–0.18% in 2030, depending on whether new technologies are assumed to be adopted. If a sufficiently high methane tax incentivizes adoption of new technology, the negative impacts of a tax are lower than that of a standard once the policy is fully implemented. While the overall economy-wide impact of a technology standard is relatively low, we find that it is as much as 65% higher than the direct costs.
Keywords: CGE model; Climate policy; Economic impacts; Methane emissions; Methane tax (search for similar items in EconPapers)
JEL-codes: C68 D57 D58 Q52 Q54 Q58 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:resene:v:76:y:2024:i:c:s0928765523000763
DOI: 10.1016/j.reseneeco.2023.101421
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