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We consider the effects of a maritime bunker levy on ship-owner profits, trade, and emissions. Standard and augmented gravity models are employed using data from 2016 to estimate the impact of a change in transit time and transit cost on grain and soybean trade flows and on vessel speed. Results for a bunker levy of 50 USD/tonne of fuel, or less, stress that it will not trigger a change in the optimal speed of the vessel which is contrary to most theoretical models that predict an increase in fuel costs will always lead to a reduction in speed and carbon emissions. For markets where the shipowners pass the tax on to final consumers, it is also optimal to keep the same speed (and transit time) as long as the tax is equal to, or less than, 100 USD/tonne. Bunker levies exceeding 100 USD/tonne may be needed to reduce carbon when trade flows are sensitive to trade costs and transport time, as may be the case for many agricultural commodities.

Abstract We develop a multi-sector business cycle model to analyze stochastic implications of reducing CO 2 emissions with carbon permits or with carbon taxes in the presence of multiple sources of macroeconomic uncertainty. The model is calibrated to reflect the U.S. experience. As in previous studies, using a single-sector version of our model, we find that the cap regime generates lower volatility of real variables than the tax regime, but the latter may be preferable from the welfare perspective. Still, our multi-sector analysis points to the importance of the origin of the shocks in the ranking of the two instruments and to the desirability of going beyond a single-sector analysis in evaluating their merits. We find no significant difference between the cap and the tax regimes when shocks come from non-energy sectors. In contrast, the cap has lower volatility but higher welfare costs than the tax for the shocks to energy production.

We consider the effects of a maritime bunker levy on ship-owner profits, trade, and emissions. Standard and augmented gravity models are employed using data from 2016 to estimate the impact of a change in transit time and transit cost on grain and soybean trade flows and on vessel speed. Results for a bunker levy of 50 USD/tonne of fuel, or less, stress that it will not trigger a change in the optimal speed of the vessel which is contrary to most theoretical models that predict an increase in fuel costs will always lead to a reduction in speed and carbon emissions. For markets where the shipowners pass the tax on to final consumers, it is also optimal to keep the same speed (and transit time) as long as the tax is equal to, or less than, 100 USD/tonne. Bunker levies exceeding 100 USD/tonne may be needed to reduce carbon when trade flows are sensitive to trade costs and transport time, as may be the case for many agricultural commodities.

In this paper, we examine the impact policy choices, including a carbon tax, on the optimal allocation of power across different generation sources and on future investments in generating facilities. The focus in on the Alberta power grid as it is heavily dependent on fossil fuels and has only limited ties to other power grids, although the model could be extended to a larger and even multiple grids. Results indicate that, as wind penetrates the extant generating mix characterizing the grid, cost savings and emission reductions do not decline linearly, but at a decreasing rate. However, if flexibility is allowed then, as the carbon tax increases to $40 per tCO2 or above, existing coal plants start to be replaced by newly constructed wind farms and natural gas plants. If coal can be completely eliminated from the energy mix and replaced by natural gas and wind, substantial savings of 31.03 Mt CO2 (58% of total emissions) can result. However, this occurs for carbon taxes of over $170/tCO2. The associated high capital costs of new generating facilities may thus not be an ideal use of funds for addressing climate change.

Previous literature has shown that manufacturers’ choices between radical and incremental green innovation modes can greatly impact the tradeoff between industry growth and carbon emission reduction. Yet, how the government can motivate manufacturers to implement radical green innovations to reduce carbon emission is unclear. In this paper, the researchers construct an evolutionary game model to analyze the joint impacts of carbon tax and innovation subsidy on manufacturers’ choices of green innovation mode. We derive the conditions for manufacturers’ stable strategies. Based on those results, we find that four factors—carbon tax, innovation subsidy, consumer green preference, and manufacturers’ capabilities of absorbing and adopting new technologies—may facilitate the choice of radical innovation. Furthermore, we conduct numerical simulations to verify the theoretical results, and further illustrate how the synergy of carbon tax rate and subsidy level affects the evolution of the green innovation mode choices. Specifically, we demonstrate the superiority of portfolio policy in the early stage of green innovation over single policy. In contrast, in the later stage, it is carbon tax but not innovation subsidy that remains effective. We discuss the insights for the government to formulate appropriate environmental policies to effectively promote the adoption of green innovation and reduce carbon emission.

AbstractCarbon taxes are frequently advocated as a means of reducing greenhouse gas (GHG) emissions, yet their political feasibility remains a challenge. To enhance their political appeal, carbon tax proponents have proposed revenue recycling as a means of alleviating public concern with this instrument's visible costs. Analyzing data from identical survey‐experiments administered in the United States, Canada, and Germany, we examine the extent to which returning revenues to the public has the potential to broaden the political acceptability of carbon taxes across ideological and national contexts. While public opinion is sensitive to the cost attributes of carbon taxes, we find that in some cases, opposition to carbon taxes can be offset by a reduction in income taxes. However, these effects tend to be modest in size, limited to some ideological groups, and varied across countries. Moreover, we demonstrate that fairness perceptions are a crucial mechanism linking revenue recycling to carbon tax support in all countries examined.