Modeling the Transport Sector: The Role of Existing Fuel Taxes in Climate Policy

Joint Program Reprint • Book/Chapter
Modeling the Transport Sector: The Role of Existing Fuel Taxes in Climate Policy
Paltsev, S., H.D. Jacoby, J. Reilly, L. Viguier and M. Babiker (2005)
Energy and Environment, 25th Anniversary of the Group for Research in Decision Analysis, Vol. 3, R. Loulou, J. Waaub and G. Zaccour (editors), Springer-Verlag, New York, pp. 211-238

Abstract/Summary:

Existing fuel taxes play a major role in determining the welfare effects of exempting the transportation sector from measures to control greenhouse gases. To study this phenomenon we modify the MIT Emissions Prediction and Policy Analysis (EPPA) model to disaggregate the household transportation sector. This improvement requires an extension of the GTAP data set that underlies the model. The revised and extended facility is then used to compare economic costs of cap-and-trade systems differentiated by sector, focusing on two regions: the USA where the fuel taxes are low, and Europe where the fuel taxes are high. We find that the interplay between carbon policies and pre-existing taxes leads to different results in these regions: in the USA exemption of transport from such a system would increase the welfare cost of achieving a national emissions target, while in Europe such exemptions will correct pre-existing distortions and reduce the cost.

© 2005 Springer Science and Business Media

Link to full document (Note large file size: 51 MB PDF)

Book Summary on publisher's website

Citation:

Paltsev, S., H.D. Jacoby, J. Reilly, L. Viguier and M. Babiker (2005): Modeling the Transport Sector: The Role of Existing Fuel Taxes in Climate Policy. Energy and Environment, 25th Anniversary of the Group for Research in Decision Analysis, Vol. 3, R. Loulou, J. Waaub and G. Zaccour (editors), Springer-Verlag, New York, pp. 211-238 (http://globalchange.mit.edu/publication/14233)

Supersedes:

Reprint 2005-7. Modeling the Transport Sector: The Role of Existing Fuel Taxes in Climate Policy (Energy and Environment, 25th Anniversary of the Group for Research in Decision Analysis, Vol. 3, 2005)

Superseded by:

Reprint 2005-7. Modeling the Transport Sector: The Role of Existing Fuel Taxes in Climate Policy (Energy and Environment, 25th Anniversary of the Group for Research in Decision Analysis, Vol. 3, 2005)
  • Joint Program Reprint
  • Book/Chapter
Modeling the Transport Sector: The Role of Existing Fuel Taxes in Climate Policy

Paltsev, S., H.D. Jacoby, J. Reilly, L. Viguier and M. Babiker

Energy and Environment, 25th Anniversary of the Group for Research in Decision Analysis, Vol. 3
2005-7
R. Loulou, J. Waaub and G. Zaccour (editors), Springer-Verlag, New York, pp. 211-238

Abstract/Summary: 

Existing fuel taxes play a major role in determining the welfare effects of exempting the transportation sector from measures to control greenhouse gases. To study this phenomenon we modify the MIT Emissions Prediction and Policy Analysis (EPPA) model to disaggregate the household transportation sector. This improvement requires an extension of the GTAP data set that underlies the model. The revised and extended facility is then used to compare economic costs of cap-and-trade systems differentiated by sector, focusing on two regions: the USA where the fuel taxes are low, and Europe where the fuel taxes are high. We find that the interplay between carbon policies and pre-existing taxes leads to different results in these regions: in the USA exemption of transport from such a system would increase the welfare cost of achieving a national emissions target, while in Europe such exemptions will correct pre-existing distortions and reduce the cost.

© 2005 Springer Science and Business Media

Link to full document (Note large file size: 51 MB PDF)

Book Summary on publisher's website

Supersedes: 

Modeling the Transport Sector: The Role of Existing Fuel Taxes in Climate Policy