Two World Views on Carbon Revenues

Dallas Burtraw and Samantha Sekar ()
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Samantha Sekar: Resources for the Future

RFF Working Paper Series from Resources for the Future

Abstract: The introduction of a price on carbon dioxide is expected to be more efficient than prescriptive regulation. It also instantiates substantial economic value. Initially programs allocated this value to incumbent firms (grandfathering), but the growing movement toward auctioning or emissions fees makes carbon revenues into a payment for environmental services. This paper asks, to whom should this payment accrue? If the atmosphere resource, as a common property resource, is viewed as the property of government, then the decision of how to use the revenue can be viewed as a fiscal problem, and efficiency considerations dominate. If the atmosphere is viewed as held in common, then the revenue might be considered compensation to owners and delivered as payment to individuals. This decision has efficiency and distributional consequences that affect the political economy and the likelihood and durability of climate policy. We summarize trends among six existing carbon-pricing programs.

Keywords: auction; cap and trade; emissions fee; emissions tax; allocation; grandfathering; climate change; policy (search for similar items in EconPapers)
JEL-codes: H23 N5 P48 (search for similar items in EconPapers)
Date: 2013-10-10
New Economics Papers: this item is included in nep-ene, nep-env and nep-res
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Citations: View citations in EconPapers (4)

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Journal Article: Two world views on carbon revenues (2014)
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