Intensity-based rebating of emissions pricing revenues | Carolyn Fischer
Dr. Carolyn Fischer is Professor of environmental economics at the Vrije Universiteit Amsterdam and a Canada 150 Research Chairholder in Climate Economics, Innovation and Policy at the University of Ottawa.
She will be presenting her paper ‘Intensity-based rebating of emissions pricing revenues’
Carbon pricing policies worldwide are increasingly coupled with direct or indirect subsidies for emission-intensive and trade-exposed firms. We analyze the incentives created by two novel forms of rebating that reward additional emissions 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). We rank the different rebate schemes in terms of output protection, emission intensity re- duction, and emissions price pressure. 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 somewhat in between, offering some output protection but introducing an additional distortion by implicitly subsidizing emissions while incentivizing intensity reductions. Given the same sectoral emissions target, IBOR and IBER lead to the same output and intensity as conventional OBR, but with lower emissions prices. We supplement partial equilibrium theoretical analysis with numerical simulations to assess the performance of different mechanisms in a multi-sector general equilibrium model that accounts for economy-wide market interactions.
Please email firstname.lastname@example.org with the name of the presenter in order to request the Zoom joining details for this workshop by by 5pm on Tuesday 25th May 2021.