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Energy and the environment
Published in Peter M. Schwarz, Energy Economics, 2023
Economists cheered the use of cap-and-trade as more efficient than CAC. Under technology standards, all firms must use a required technology to reduce emissions, such as a scrubber to reduce sulfur. Under performance standards, all firms must reduce emissions by the same percentage, although they have flexibility on the technology to achieve the standard. Emissions trading allows further efficiency gains by allowing producers capable of reducing emissions at low cost to sell permits to firms with higher marginal abatement costs (MACs). The result is that firms with lower MACS reduce their emissions by more than firms with higher MACs, which is a further efficiency gain. The 1990 Amendments first introduced emissions trading for sulfur followed by nitrous oxide (NOx). NOx emissions are an ingredient in ground-level ozone often referred to as smog.
Offshore manufacturing contract design based on transfer price considering green tax: a bilevel programming approach
Published in International Journal of Production Research, 2018
Sanjeet Singh, Nivedita Haldar, Anindya Bhattacharya
In terms of defining various types of pollution taxes, experts have identified six different categories like direct tax, indirect tax, direct emissions tax, tradable permit with quota, subsidies for emissions reduction and finally carbon tax. Direct taxes are same as other standard economy wide taxes which are most effective in nature to control polluting activities. Indirect environmental taxes can be levied on related goods of main activities which can indirectly reduce the pollution impact. Levying a tax on gasoline is one such example, which can indirectly reduce vehicle use (Fullerton and West 2002). Direct emissions taxes are linked to the absolute amount of emissions coming out of the premises of main economic activities, such as air pollution tax, water discharge tax, etc. Tradable permit and quota is a market-based instrument which enables the group of polluters to minimise their marginal abatement cost of pollution (Tietenberg 2003). Subsidies on emissions reduction activities can indirectly improve the emissions reduction activities by incentivising the polluters to install subsidised high-efficient technologies and equipment (Conrad 1993). Finally, the carbon tax is the latest addition to the global debate on economic measures to curb harmful emissions in the atmosphere (Parry, Williams, and Goulder 1999).