Abstract

http://ssrn.com/abstract=1769908
 


 



California Industry Impacts of a Statewide Carbon Pricing Policy with Output-Based Rebates


Richard D. Morgenstern


Resources for the Future

Eric M. Moore


Resources for the Future

February 24, 2011

Resources for the Future Discussion Paper No. 11-05

Abstract:     
This study estimates the impacts on a disaggregated set of California industries of introducing a carbon pricing policy within the state.Two time horizons are considered, the "very short run" and the "short run". To limit adverse impacts on the state’s energy-intensive and trade-exposed (EITE) industries, we develop illustrative policy options involving free allowance allocations of emissions permits to particular industries and limited border adjustments on coal, natural gas, crude oil, and refined petroleum product imports, as well as on electricity. Overall, we find relatively small impacts on energy-intensive industries with the rebates in place. The average reduction in EITE output is 0.4 percent. There is, however, considerable variation in impacts among the EITE industries. We also find that the ability to pass on costs, as assumed in the short run case, dramatically reduces adverse profit impacts to less than 1.5 percent in most cases, regardless of the rebate scenario. Based on national-level modeling done outside of this study, we estimate that over the long term, the average EITE output losses with the rebates in place would be expected to be somewhat smaller than the results reported here.

Number of Pages in PDF File: 67

Keywords: carbon price, competitiveness, input-output analysis, output-based allocation

JEL Classification: D22, D57, H23

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Date posted: February 27, 2011  

Suggested Citation

Morgenstern, Richard D. and Moore, Eric M., California Industry Impacts of a Statewide Carbon Pricing Policy with Output-Based Rebates (February 24, 2011). Resources for the Future Discussion Paper No. 11-05. Available at SSRN: http://ssrn.com/abstract=1769908 or http://dx.doi.org/10.2139/ssrn.1769908

Contact Information

Richard D. Morgenstern (Contact Author)
Resources for the Future ( email )
1616 P Street, NW
Washington, DC 20036
United States
Eric Michael Moore
Resources for the Future ( email )
1616 P Street, NW
Washington, DC 20036
United States
202-328-5178 (Phone)
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