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Cheaper, greener and more efficient : rationalising UK carbon prices
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Advani, Arun and Stoye, George (2017) Cheaper, greener and more efficient : rationalising UK carbon prices. Fiscal Studies, 38 (2). pp. 269-299. doi:10.1111/1475-5890.12097
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Official URL: http://dx.doi.org/10.1111/1475-5890.12097
Abstract
Current UK energy use policies, which primarily aim to reduce carbon emissions, provide abatement incentives that vary by user and fuel, creating inefficiency. Distributional concerns are often given as a justification for the lower carbon price faced by households, but there is little rationale for carbon prices associated with the use of gas to be lower than those for electricity. We consider reforms that raise carbon prices faced by households and reduce the variation in carbon prices across gas and electricity use, improving the efficiency of emissions reduction. We show that the revenue raised from these reforms can be recycled in a way that ameliorates some of the distributional concerns. Whilst such recycling is not able to protect all poorer households, existing policy also makes distributional trade-offs, but does so in an opaque and inefficient way.
| Item Type: | Journal Article | |||||||||
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| Subjects: | H Social Sciences > HD Industries. Land use. Labor | |||||||||
| Divisions: | Faculty of Social Sciences > Economics | |||||||||
| Library of Congress Subject Headings (LCSH): | Gas companies -- Rates -- Great Britain, Electric utilities -- Rates -- Great Britain, Energy consumption, Greenhouse gas mitigation -- Great Britain | |||||||||
| Journal or Publication Title: | Fiscal Studies | |||||||||
| Publisher: | Wiley-Blackwell Publishing, Inc | |||||||||
| ISSN: | 0143-5671 | |||||||||
| Official Date: | 9 June 2017 | |||||||||
| Dates: |
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| Volume: | 38 | |||||||||
| Number: | 2 | |||||||||
| Page Range: | pp. 269-299 | |||||||||
| DOI: | 10.1111/1475-5890.12097 | |||||||||
| Status: | Peer Reviewed | |||||||||
| Publication Status: | Published | |||||||||
| Access rights to Published version: | Open Access | |||||||||
| RIOXX Funder/Project Grant: |
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