Rebating Revenues from Unilateral Emissions Pricing

doi:10.1596/1813-9450-10922

Publication:
Rebating Revenues from Unilateral Emissions Pricing

dc.contributor.author	Böhringer, Christoph
dc.contributor.author	Fischer, Carolyn
dc.contributor.author	Rivers, Nicholas
dc.date.accessioned	2024-09-25T13:14:10Z
dc.date.available	2024-09-25T13:14:10Z
dc.date.issued	2024-09-24
dc.description.abstract	This paper evaluates alternative options for rebating revenues from a unilateral emissions price, focusing on energy-intensive and trade-exposed industries. A theoretical model is developed to demonstrate that conditional rebating policies---which would be distortionary in a first-best world---may be welfare-improving. For example, this could occur in a context where emissions leakage and terms-of-trade changes are associated with the introduction of an emissions price, or when political constraints prevent the emissions price from fully reflecting the social cost of the emissions. A numerical simulation model is used to quantify the differences in welfare, leakage, terms of trade, output, and emissions across carbon prices with alternative rebating options for these leakage-prone industries. The different situations of the European Union and the United States are used as examples. The findings indicate that from a domestic perspective, rebating emissions revenues proportionately to firm output is typically superior to other rebating options when the emissions price is set close to the social cost of emissions. Rebating emission revenues to reward reductions in emissions intensity is typically superior when emissions are significantly under-priced. A country that is more emissions-intensive and less exposed to leakage may prefer to rebate in proportion to total abatement when the emissions price is sufficiently low. The quantitative results indicate that there are significant welfare losses for incorrect choices of the rebating option.	en
dc.identifier	http://documents.worldbank.org/curated/en/099832509202427896/IDU19a511d591edfd149cc1915a107a13159f1f4
dc.identifier.doi	10.1596/1813-9450-10922
dc.identifier.uri	https://hdl.handle.net/10986/42196
dc.language	English
dc.language.iso	en_US
dc.publisher	Washington, DC: World Bank
dc.relation.ispartofseries	Policy Research Working Paper; 10922
dc.rights	CC BY 3.0 IGO
dc.rights.holder	World Bank
dc.rights.uri	https://creativecommons.org/licenses/by/3.0/igo/
dc.subject	UNILATERAL CLIMATE POLICY
dc.subject	CARBON PRICING
dc.subject	REVENUE RECYCLING
dc.subject	CLIMATE ACTION
dc.subject	SDG 8
dc.title	Rebating Revenues from Unilateral Emissions Pricing	en
dc.type	Working Paper
dspace.entity.type	Publication
okr.crossref.title	Rebating Revenues from Unilateral Emissions Pricing
okr.date.disclosure	2024-09-24
okr.date.lastmodified	2024-09-20T00:00:00Z	en
okr.doctype	Policy Research Working Paper
okr.doctype	Publications & Research
okr.docurl	http://documents.worldbank.org/curated/en/099832509202427896/IDU19a511d591edfd149cc1915a107a13159f1f4
okr.guid	099832509202427896
okr.identifier.docmid	IDU-9a511d59-edfd-49cc-915a-07a13159f1f4
okr.identifier.doi	10.1596/1813-9450-10922
okr.identifier.doi	https://doi.org/10.1596/1813-9450-10922
okr.identifier.externaldocumentum	34393525
okr.identifier.internaldocumentum	34393525
okr.identifier.report	WPS10922
okr.import.id	5355
okr.imported	true	en
okr.language.supported	en
okr.pdfurl	http://documents.worldbank.org/curated/en/099832509202427896/pdf/IDU19a511d591edfd149cc1915a107a13159f1f4.pdf	en
okr.region.geographical	World
okr.topic	Environment::Climate Change Impacts
okr.topic	Environment::Climate Change Mitigation and Green House Gases
okr.topic	International Economics and Trade::Trade and Environment
okr.topic	Public Sector Administration::Revenue Administration
okr.unit	DEC-Sustainability & Infrastruct (DECSI)