Copyright (c) 2010 All rights reserved. http://works.bepress.com/gilbert_metcalf Recent documents in Gilbert E. Metcalf en-us Wed, 03 Mar 2010 09:14:11 PST 3600 http://works.bepress.com/gilbert_metcalf/84 http://works.bepress.com/gilbert_metcalf/84 Wed, 06 Jan 2010 13:53:37 PST Cap and trade systems are emerging as the front-running policy choice to address climate change concerns in many countries. One of the apparent attractions of this approach is the ability to achieve hard limits on emissions over a control period. The cost of achieving this certainty on emission limits is price volatility. I discuss and evaluate various approaches within cap and trade systems to reduce price volatility. A fundamental trade-off exists between certainty of emission limits and price volatility. A pure carbon tax sacrifices certainty of emission limits in favor of price stability. I discuss how a hybrid carbon tax can be designed to achieve a balance between price stability and emissions certainty. This hybrid, dubbed the Responsive Emissions Autonomous Carbon Tax (REACT), combines the short-run price stability of a carbon tax with the long-run certainty of emission reductions over a control period. Gilbert E. Metcalf Environmental Policy in the Energy Sector Energy Tax Policy Environmental Policy http://works.bepress.com/gilbert_metcalf/83 http://works.bepress.com/gilbert_metcalf/83 Mon, 30 Nov 2009 10:38:10 PST Federal tax policy provides a broad array of incentives for energy investment. I review those policies and construct estimates of marginal effective tax rates for different energy capital investments as of 2007. Effective tax rates vary widely across investment classes. I then consider investment in wind generation capital and regress investment against a user cost of capital measure along with other controls. I find that wind investment is strongly responsive to changes in tax policy. Based on the coefficient estimates the elasticity of investment with respect to the user cost of capital is in the range of -1 to -2. I also demonstrate that the federal production tax credit plays a key role in driving wind investment over the past eighteen years. Gilbert E. Metcalf H21 Energy Tax Policy http://works.bepress.com/gilbert_metcalf/82 http://works.bepress.com/gilbert_metcalf/82 Fri, 24 Jul 2009 09:54:51 PDT Gilbert E. Metcalf http://works.bepress.com/gilbert_metcalf/81 http://works.bepress.com/gilbert_metcalf/81 Fri, 24 Jul 2009 09:53:51 PDT Gilbert E. Metcalf http://works.bepress.com/gilbert_metcalf/80 http://works.bepress.com/gilbert_metcalf/80 Fri, 24 Jul 2009 09:52:15 PDT Gilbert E. Metcalf Environmental Policy http://works.bepress.com/gilbert_metcalf/79 http://works.bepress.com/gilbert_metcalf/79 Fri, 24 Jul 2009 09:49:31 PDT The following paper discusses the difficulties of achieving climate change policy goals with low-carbon subsidies as opposed to using taxes to raise the price of carbon intensive activities. First, subsidies lower the cost of energy, and thus, encourage consumer demand responses that work in opposition to the goal of reducing emissions. Second, it is difficult to achieve technology neutrality with subsidies. Third, many subsidies are inframarginal. Finally, subsidies often suffer from unintended interactions with other policies. The paper concludes with some observations on the use of price-based instruments and discusses how a carbon tax could be designed to achieve environmental goals over a control period. Gilbert E. Metcalf Energy Tax Policy http://works.bepress.com/gilbert_metcalf/78 http://works.bepress.com/gilbert_metcalf/78 Fri, 24 Jul 2009 09:46:44 PDT We consider the design of a tax on greenhouse gas emissions for the United States. We consider three major issues: the tax rate (including the use of the revenues and rate changes over time), the optimal tax base, and international trade concerns. We show that a well-designed carbon tax can capture about 80% of U.S. emissions by taxing only a few thousand taxpayers, and almost 90% with a modest additional cost. We recommend full or partial delegation of rate setting authority to an agency to ensure that rates reflect current information about the costs of carbon emissions and abatement. Adjustments should be made to the income tax to ensure that a carbon tax is revenue neutral and distributionally neutral. Finally, we propose an origin-basis system for trade with countries that have an adequate carbon tax, and a system of border taxes for imports from countries without a carbon tax. We suggest a system that imposes presumptive border tax adjustments, allowing an individual firm to prove that a different rate should apply. The presumptive tax could be based on average emissions for production of the item by either the exporting country or the importing country. Gilbert E. Metcalf Environmental Policy in the Energy Sector http://works.bepress.com/gilbert_metcalf/77 http://works.bepress.com/gilbert_metcalf/77 Wed, 10 Jun 2009 14:19:15 PDT This paper measures the direct and indirect incidence of a carbon tax using current income and two measures of lifetime income to rank households. Our results suggest that carbon taxes are more regressive when annual income is used as a measure of economic welfare than when lifetime income measures are used. Further, the direct component of the tax, in any given year, is significantly more regressive than the indirect component. We observe a modest shift over time with the direct component of carbon taxes becoming less regressive and the indirect component becoming more regressive. These effects mostly offset each other and the distribution of the total tax burden has not changed much over time. In addition we find that regional variation has fluctuated over the years of our analysis. By 2003 there is little systematic variation in carbon tax burdens across regions of the country. Kevin Hassett http://works.bepress.com/gilbert_metcalf/76 http://works.bepress.com/gilbert_metcalf/76 Wed, 10 Jun 2009 14:14:13 PDT The United States is moving closer to enacting a policy to reduce domestic emissions of greenhouse gases. A key element in any plan to reduce emissions will be to place a price on greenhouse gas emissions. This paper discusses the different approaches that can be taken to price emissions and assesses their strengths and weaknesses. Gilbert E. Metcalf http://works.bepress.com/gilbert_metcalf/75 http://works.bepress.com/gilbert_metcalf/75 Wed, 08 Apr 2009 05:17:41 PDT In previous papers I have described a revenue and distributionally neutral approach to reducing U.S. greenhouse gas emissions that uses a carbon tax. The revenue from the carbon tax is used to finance an environmental earned income tax credit designed to be distributionally neutral. The carbon tax reform proposal is also revenue neutral and avoids conflating carbon policy with debates over the appropriate size of the federal budget. This paper describes a variant to address concerns of environmentalists that a carbon tax does not provide certainty of emission reductions over the control period. The Responsive Emissions Autonomous Carbon Tax (REACT) combines the short-run price stability of a carbon tax with the long-run certainty of emission reductions over a control period. Gilbert E. Metcalf Environmental Policy in the Energy Sector http://works.bepress.com/gilbert_metcalf/74 http://works.bepress.com/gilbert_metcalf/74 Sun, 18 Jan 2009 14:01:35 PST Gilbert E. Metcalf http://works.bepress.com/gilbert_metcalf/73 http://works.bepress.com/gilbert_metcalf/73 Fri, 16 Jan 2009 07:01:34 PST Gilbert E. Metcalf http://works.bepress.com/gilbert_metcalf/72 http://works.bepress.com/gilbert_metcalf/72 Fri, 16 Jan 2009 07:01:01 PST Gilbert E. Metcalf http://works.bepress.com/gilbert_metcalf/71 http://works.bepress.com/gilbert_metcalf/71 Fri, 16 Jan 2009 07:00:16 PST Gilbert E. Metcalf http://works.bepress.com/gilbert_metcalf/70 http://works.bepress.com/gilbert_metcalf/70 Fri, 16 Jan 2009 06:59:20 PST Gilbert E. Metcalf http://works.bepress.com/gilbert_metcalf/69 http://works.bepress.com/gilbert_metcalf/69 Fri, 16 Jan 2009 06:58:31 PST Gilbert E. Metcalf http://works.bepress.com/gilbert_metcalf/68 http://works.bepress.com/gilbert_metcalf/68 Fri, 16 Jan 2009 06:57:43 PST Gilbert E. Metcalf http://works.bepress.com/gilbert_metcalf/67 http://works.bepress.com/gilbert_metcalf/67 Fri, 16 Jan 2009 06:57:12 PST Gilbert E. Metcalf http://works.bepress.com/gilbert_metcalf/66 http://works.bepress.com/gilbert_metcalf/66 Fri, 16 Jan 2009 06:56:34 PST Gilbert E. Metcalf http://works.bepress.com/gilbert_metcalf/65 http://works.bepress.com/gilbert_metcalf/65 Fri, 16 Jan 2009 06:56:13 PST Gilbert E. Metcalf