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Carbon Footprint Taxes

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  • Carol McAusland
  • Nouri Najjar

Abstract

We analyze whether a carbon consumption tax is logistically feasible. We consider a carbon footprint tax (CFT), which would be modeled after a credit-method value added tax. The basis for the tax would be a product’s carbon footprint, which includes all of the emissions released during production of the good and its inputs as well as any greenhouse gases latent in the product. Our analysis suggests that a pure CFT, requiring the calculation of the carbon footprint of every individual product, may be prohibitively costly. However a hybrid CFT seems economically feasible. The hybrid CFT would give firms the option to either calculate the carbon footprint of their outputs—and have their products taxed based on those footprints—or use product-class specific default carbon footprints as the tax basis, thereby saving on calculation costs. Because the CFT would be levied on all goods consumed domestically, the CFT would keep domestic firms on an even footing with those producing in countries without active climate policy, protecting competitiveness and reducing leakage. Copyright Springer Science+Business Media Dordrecht 2015

Suggested Citation

  • 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.
    • Handle: RePEc:kap:enreec:v:61:y:2015:i:1:p:37-70
    DOI: 10.1007/s10640-013-9749-5
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    2. Maïmouna Yokessa & Stéphan Marette, 2019. "A Tax Coming from the IPCC Carbon Prices Cannot Change Consumption: Evidence from an Experiment," Sustainability, MDPI, vol. 11(18), pages 1-20, September.
    3. Christoph Böhringer & Knut Einar Rosendahl & Halvor Briseid Storrøsten, 2015. "Mitigating carbon leakage: Combining output-based rebating with a consumption tax," ZenTra Working Papers in Transnational Studies 54 / 2015, ZenTra - Center for Transnational Studies.
    4. Larch, Mario & Wanner, Joschka, 2017. "Carbon tariffs: An analysis of the trade, welfare, and emission effects," Journal of International Economics, Elsevier, vol. 109(C), pages 195-213.
    5. Mark Sommer & Kurt Kratena, 2020. "Consumption and production-based CO2 pricing policies: macroeconomic trade-offs and carbon leakage," Economic Systems Research, Taylor & Francis Journals, vol. 32(1), pages 29-57, January.
    6. Songyi Wang & Fengming Tao & Yuhe Shi & Haolin Wen, 2017. "Optimization of Vehicle Routing Problem with Time Windows for Cold Chain Logistics Based on Carbon Tax," Sustainability, MDPI, vol. 9(5), pages 1-23, April.
    7. Larch, Mario & Löning, Markus & Wanner, Joschka, 2018. "Can degrowth overcome the leakage problem of unilateral climate policy?," Ecological Economics, Elsevier, vol. 152(C), pages 118-130.
    8. Cheng, Haitao, 2021. "Border carbon adjustments with endogenous assembly locations," Economic Modelling, Elsevier, vol. 105(C).
    9. Songyi Wang & Fengming Tao & Yuhe Shi, 2018. "Optimization of Location–Routing Problem for Cold Chain Logistics Considering Carbon Footprint," IJERPH, MDPI, vol. 15(1), pages 1-17, January.
    10. Brian R. Copeland & M. Scott Taylor, 2017. "Environmental and resource economics: A Canadian retrospective," Canadian Journal of Economics, Canadian Economics Association, vol. 50(5), pages 1381-1413, December.
    11. Songyi Wang & Fengming Tao & Yuhe Shi, 2018. "Optimization of Inventory Routing Problem in Refined Oil Logistics with the Perspective of Carbon Tax," Energies, MDPI, vol. 11(6), pages 1-17, June.
    12. Xiaoping Li & Sai Hu & Lifu Jiang & Bing Han & Jie Li & Xuan Wei, 2023. "Spatiotemporal Patterns and the Development Path of Land-Use Carbon Emissions from a Low-Carbon Perspective: A Case Study of Guizhou Province," Land, MDPI, vol. 12(10), pages 1-17, October.
    13. Gaoyuan Qin & Fengming Tao & Lixia Li, 2019. "A Vehicle Routing Optimization Problem for Cold Chain Logistics Considering Customer Satisfaction and Carbon Emissions," IJERPH, MDPI, vol. 16(4), pages 1-17, February.
    14. Ferrara, Ida & Missios, Paul & Yildiz, Halis Murat, 2019. "Product quality, consumption externalities, and the role of National Treatment," European Economic Review, Elsevier, vol. 117(C), pages 1-35.
    15. Marette Stéphan, 2016. "Non-Tariff Measures When Alternative Regulatory Tools Can Be Chosen," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 14(1), pages 1-17, May.
    16. Soham Baksi & Amrita Ray Chaudhuri, 2016. "International Trade and Environmental Cooperation among Heterogeneous Countries," Departmental Working Papers 2016-03, The University of Winnipeg, Department of Economics.
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    18. Brian R. Copeland & M. Scott Taylor, 2017. "Environmental and resource economics: A Canadian retrospective," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 50(5), pages 1381-1413, December.

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