IDEAS home Printed from https://ideas.repec.org/a/eee/enepol/v39y2011i9p4920-4931.html
   My bibliography  Save this article

Climate policy and energy-intensive manufacturing: A comprehensive analysis of the effectiveness of cost mitigation provisions in the American Energy and Security Act of 2009

Author

Listed:
  • Bassi, Andrea M.
  • Yudken, Joel S.

Abstract

In response to the ongoing climate policy debates, this study examines the cost impacts of carbon-pricing legislation on selected US energy-intensive manufacturing industries. Specifically, it evaluates output-based rebate measures and the border adjustment provision specified in the bill, and tests the effectiveness of cost containment features of the policy, such as the international offsets, under various market assumptions. Results of the examination confirm that in all policy cases or industries, the output-based rebates would effectively mitigate the manufacturers' carbon-pricing costs in the short-to-medium term. However as the rebates decline after 2020, especially in a case where low-carbon electricity generation or international offsets are not readily available or implemented, these industries would suffer greater declines in profitability. At the same time, the study's findings were mixed concerning the effectiveness of the border adjustment measure in reducing cost impacts after 2020. While border adjustments could reduce costs to US manufacturing sectors, at least temporarily, they could create problems for domestic downstream producers and exports, under cost pass-along conditions. However at best, the output-based rebates, international offset, and border adjustment and measures primarily buy time for manufacturers. The only long-term solution is for EITE industries to invest in energy-saving and next-generation low-carbon technologies.

Suggested Citation

  • Bassi, Andrea M. & Yudken, Joel S., 2011. "Climate policy and energy-intensive manufacturing: A comprehensive analysis of the effectiveness of cost mitigation provisions in the American Energy and Security Act of 2009," Energy Policy, Elsevier, vol. 39(9), pages 4920-4931, September.
    • Handle: RePEc:eee:enepol:v:39:y:2011:i:9:p:4920-4931
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0301421511004794
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Trevor Houser & Rob Bradley & Britt Childs, 2008. "Leveling the Carbon Playing Field: International Competition and US Climate Policy Design," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 4204, April.
    2. Choi, Jun-Ki & Bakshi, Bhavik R. & Haab, Timothy, 2010. "Effects of a carbon price in the U.S. on economic sectors, resource use, and emissions: An input-output approach," Energy Policy, Elsevier, vol. 38(7), pages 3527-3536, July.
    3. Morgenstern, Richard D. & Ho, Mun & Shih, J.-S.Jhih-Shyang & Zhang, Xuehua, 2004. "The near-term impacts of carbon mitigation policies on manufacturing industries," Energy Policy, Elsevier, vol. 32(16), pages 1825-1841, November.
    4. Ho, Mun S. & Morgenstern, Richard & Shih, Jhih-Shyang, 2008. "Impact of Carbon Price Policies on U.S. Industry," RFF Working Paper Series dp-08-37, Resources for the Future.
    5. Sergey Paltsev & John M. Reilly & Henry D. Jacoby & Angelo C. Gurgel & Gilbert E. Metcalf & Andrei P. Sokolov & Jennifer F. Holak, 2007. "Assessment of U.S. Cap-and-Trade Proposals," NBER Working Papers 13176, National Bureau of Economic Research, Inc.
    6. Bassi, Andrea M. & Yudken, Joel S. & Ruth, Matthias, 2009. "Climate policy impacts on the competitiveness of energy-intensive manufacturing sectors," Energy Policy, Elsevier, vol. 37(8), pages 3052-3060, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bao, Qin & Tang, Ling & Zhang, ZhongXiang & Wang, Shouyang, 2013. "Impacts of border carbon adjustments on China's sectoral emissions: Simulations with a dynamic computable general equilibrium model," China Economic Review, Elsevier, vol. 24(C), pages 77-94.
    2. Jiali Zheng & Han Qiao & Shouyang Wang, 2017. "The Effect of Carbon Tax in Aviation Industry on the Multilateral Simulation Game," Sustainability, MDPI, vol. 9(7), pages 1-24, July.
    3. Bao, Qin & Tang, Ling & Zhang, ZhingXiang & Qiao, Han & Wang, Shouyang, 2012. "Impact of Border Carbon Adjustments on China’s Sectoral Emissions: Simulations with a Dynamic Computable General Equilibirum Model," Working Papers 249391, Australian National University, Centre for Climate Economics & Policy.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bassi, Andrea M. & Tan, Zhuohua & Mbi, Armstrong, 2012. "Estimating the impact of investing in a resource efficient, resilient global energy-intensive manufacturing industry," Technological Forecasting and Social Change, Elsevier, vol. 79(1), pages 69-84.
    2. repec:old:wpaper:340 is not listed on IDEAS
    3. Liwayway Adkins & Richard Garbaccio & Mun Ho & Eric Moore & Richard Morgenstern, 2012. "Carbon Pricing with Output-Based Subsidies: Impacts on U.S. Industries over Multiple Time Frames," NCEE Working Paper Series 201203, National Center for Environmental Economics, U.S. Environmental Protection Agency, revised May 2012.
    4. Bartleet, Matthew & Iyer, Kris & Lawrence, Gillian & Numan-Parsons, Elisabeth & Stroombergen, Adolf, 2009. "Impact of emissions pricing on New Zealand manufacturing: A short-run analysis," Occasional Papers 10/2, Ministry of Economic Development, New Zealand.
    5. Adkins, Liwayway & Garbaccio, Richard & Ho, Mun & Moore, Eric & Morgenstern, Richard, 2010. "The Impact on U.S. industries of Carbon Prices with Output-Based Rebates over Multiple Time Frames," Conference papers 331980, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    6. Christoph Böhringer & Jared C. Carbone & Thomas F. Rutherford, 2018. "Embodied Carbon Tariffs," Scandinavian Journal of Economics, Wiley Blackwell, vol. 120(1), pages 183-210, January.
    7. Sugino, Makoto & Arimura, Toshi H. & Morgenstern, Richard D., 2013. "The effects of alternative carbon mitigation policies on Japanese industries," Energy Policy, Elsevier, vol. 62(C), pages 1254-1267.
    8. Bassi, Andrea M. & Yudken, Joel S. & Ruth, Matthias, 2009. "Climate policy impacts on the competitiveness of energy-intensive manufacturing sectors," Energy Policy, Elsevier, vol. 37(8), pages 3052-3060, August.
    9. Boehringer Christoph & Fischer Carolyn & Rosendahl Knut Einar, 2010. "The Global Effects of Subglobal Climate Policies," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(2), pages 1-35, December.
    10. Carol McAusland & Nouri Najjar, 2015. "Carbon Footprint Taxes," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 61(1), pages 37-70, May.
    11. Corbett Grainger & Charles Kolstad, 2010. "Who Pays a Price on Carbon?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 46(3), pages 359-376, July.
    12. Fischer, Carolyn & Fox, Alan K., 2012. "Comparing policies to combat emissions leakage: Border carbon adjustments versus rebates," Journal of Environmental Economics and Management, Elsevier, vol. 64(2), pages 199-216.
    13. Joseph E. Aldy & Alan J. Krupnick & Richard G. Newell & Ian W. H. Parry & William A. Pizer, 2010. "Designing Climate Mitigation Policy," Journal of Economic Literature, American Economic Association, vol. 48(4), pages 903-934, December.
    14. Sugino, Makoto & Arimura, Toshi H. & Morgenstern, Richard, 2012. "The Impact on Japanese Industry of Alternative Carbon Mitigation Policies," RFF Working Paper Series dp-12-17, Resources for the Future.
    15. Robert Heilmayr & James A. Bradbury, 2011. "Effective, efficient or equitable: using allowance allocations to mitigate emissions leakage," Climate Policy, Taylor & Francis Journals, vol. 11(4), pages 1113-1130, July.
    16. Alshammari, Yousef M., 2021. "Scenario analysis for energy transition in the chemical industry: An industrial case study in Saudi Arabia," Energy Policy, Elsevier, vol. 150(C).
    17. repec:zbw:hohpro:340 is not listed on IDEAS
    18. Fischer, Carolyn & Fox, Alan K., 2009. "Comparing Policies to Combat Emissions Leakage: Border Tax Adjustments versus Rebates," RFF Working Paper Series dp-09-02, Resources for the Future.
    19. van Asselt, Harro & Brewer, Thomas, 2010. "Addressing competitiveness and leakage concerns in climate policy: An analysis of border adjustment measures in the US and the EU," Energy Policy, Elsevier, vol. 38(1), pages 42-51, January.
    20. Nicole A. MATHYS & Jaime DE MELO, 2010. "Trade and Climate Change: The Challenges Ahead," Working Papers P14, FERDI.
    21. Joseph E. Aldy & William A. Pizer, 2009. "Issues in Designing U.S. Climate Change Policy," The Energy Journal, , vol. 30(3), pages 179-210, July.
    22. Webster, Mort & Sue Wing, Ian & Jakobovits, Lisa, 2010. "Second-best instruments for near-term climate policy: Intensity targets vs. the safety valve," Journal of Environmental Economics and Management, Elsevier, vol. 59(3), pages 250-259, May.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:39:y:2011:i:9:p:4920-4931. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/enpol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.