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US climate policy: A critical assessment of intensity standards

Author

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  • Böhringer, Christoph
  • Garcia-Muros, Xaquin
  • Gonzalez-Eguino, Mikel
  • Rey, Luis
Abstract
Intensity standards have gained substantial momentum as a regulatory instrument in US climate policy. Based on numerical simulations with a large-scale computable general equilibrium model we show that intensity standards may rather increase than decrease counterproductive carbon leakage. Moreover, standards can lead to considerable welfare losses compared to emission pricing via carbon taxation or an emissions trading system. The tradability of standards across industries is a mechanism that can reduce these negative effects.

Suggested Citation

  • Böhringer, Christoph & Garcia-Muros, Xaquin & Gonzalez-Eguino, Mikel & Rey, Luis, 2017. "US climate policy: A critical assessment of intensity standards," Energy Economics, Elsevier, vol. 68(S1), pages 125-135.
    • Handle: RePEc:eee:eneeco:v:68:y:2017:i:s1:p:125-135
    DOI: 10.1016/j.eneco.2017.10.021
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    Cited by:

    1. Lu, Yunguo & Zhang, Lin, 2022. "National mitigation policy and the competitiveness of Chinese firms," Energy Economics, Elsevier, vol. 109(C).
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    3. Hirose, Kosuke & Matsumura, Toshihiro, 2018. "An Advantage of Emission Intensity Regulation for Emission Cap Regulation in a Near-Zero Emission Industry," MPRA Paper 90134, University Library of Munich, Germany.
    4. Hirose, Kosuke & Matsumura, Toshihiro, 2020. "A comparison between emission intensity and emission cap regulations," Energy Policy, Elsevier, vol. 137(C).
    5. Ino, Hiroaki & Matsumura, Toshihiro, 2021. "Promoting green or restricting gray? An analysis of green portfolio standards," Economics Letters, Elsevier, vol. 198(C).
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    7. Limin Du & Zheng Wang & Zhaohua Xiao, 2024. "Command thy blessing from above: vertically delegated carbon reduction targets and firm export performance in China," Empirical Economics, Springer, vol. 67(6), pages 2643-2675, December.

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    More about this item

    Keywords

    Carbon leakage; Intensity standards; Computable general equilibrium;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models

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