Retiring Old Capital to Foster Decarbonization

James M. Sallee

Entrepreneurship and Innovation Policy and the Economy, 2024, vol. 3, issue 1, 115 - 138

Abstract: A majority of anthropogenic greenhouse gas emissions come from fossil fuel combustion. Combustion nearly always involves some form of durable capital, which includes vehicles, appliances, and power generators. Many policies aim to improve environmental outcomes by regulating the efficiency or emissions of this capital. Most such policies focus on new capital. This paper discusses the importance of policies that target used capital as a complement to such regulations. In particular, the paper argues that used capital policies that are designed to accelerate retirement of used capital, by either taxing its use or subsidizing its scrappage, can have efficiency benefits by addressing unintended consequences of policies that target new capital. The paper also argues that retirement subsidies are likely to be a relatively progressive policy instrument as compared with alternatives. Policy makers should understand the role that such policies might play in fostering equitable decarbonization of the economy.

Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
http://dx.doi.org/10.1086/727769 (application/pdf)
http://dx.doi.org/10.1086/727769 (text/html)
Access to the online full text or PDF requires a subscription.

Related works:
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:ucp:eipoec:doi:10.1086/727769

Access Statistics for this article

More articles in Entrepreneurship and Innovation Policy and the Economy from University of Chicago Press
Bibliographic data for series maintained by Journals Division ().