U.S. CARBON TAX SCENARIOS AND BIOENERGY

Ronald Sands ()

Climate Change Economics (CCE), 2018, vol. 09, issue 01, 1-12

Abstract: This paper documents application of the Future Agricultural Resources Model (FARM) to stylized carbon tax scenarios specified by the Stanford Energy Modeling Forum (EMF). Model results show that the method of tax revenue recycling makes a difference. Either labor-tax, or capital-tax, recycling can reduce the welfare cost of a carbon tax policy relative to lump sum recycling. Of the two tax recycling options, reducing capital taxes provides the greater reduction in welfare costs. However, carbon tax revenues decline with stringent carbon dioxide (CO2) emission targets and the availability of a negative-emissions technology such as bio-electricity with CO2 capture and storage (BECCS). As BECCS expands, net carbon tax revenues peak and decline due to an offsetting subsidy for carbon sequestration, limiting the potential for labor- or capital-tax recycling to reduce welfare costs of a climate policy.

Keywords: Bio-electricity; carbon tax; climate policy; greenhouse gas; negative emissions; revenue recycling (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:wsi:ccexxx:v:09:y:2018:i:01:n:s2010007818400109

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DOI: 10.1142/S2010007818400109

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