تخصیص مجوز کربن در یک کشور: تجزیه و تحلیل تعادل عمومی انگلستان

The Kyoto agreement includes international trade in carbon permits from 2008. We have used a CGE model to evaluate methods of allocating permits within the UK. Auctioning is broadly similar to a carbon tax, with revenues recycled to reduce other distortions. ‘Grandfathering’ some permits free to large firms would mean a loss of recycling and, possibly, give windfall profits to foreigners. Alternatively, regularly revised allocation, using ‘best practice’ estimates, would be similar to recycling revenue as an output subsidy. Such a system could allow much of the potential ‘double dividend’ to be realised, though an auction system might still be preferable.

The high potential costs of controlling pollutants by quantitative means2 has led to growing interest in economic instruments. There is a considerable literature on both the theory and practice: for example on the development of trading schemes for sulfur emissions in the USA from the 1970s onwards3,4 and over potential sulfur emission trading in Europe.5Smith (1998) discusses the Swedish scheme for controlling NOx emissions. Tietenberg (1990) stresses that economic controls are much more straightforward for uniformly mixed pollutants, such as carbon dioxide. The early literature6 concentrated on carbon taxes, and carbon or carbon/energy taxes have been introduced, or are under discussion, in many European countries, following the 1997 Kyoto agreement on limiting greenhouse gases.7 However, following pressure from the USA, Kyoto also includes provisions for countries or firms to trade their agreed quotas in an international market, following on an international scale the example set by sulfur trading in the USA. For a global pollutant, such as carbon dioxide, a system of auctionable permits works in many ways like a carbon tax, although it is the total volume, rather than the marginal abatement cost, which is fixed. However, a permit scheme has various advantages, particularly if it allows for international trading.8 Unlike a carbon tax, permits can be saved for future use — which makes sense given that carbon is a long-lasting global pollutant — allowing users greater choice over the intertemporal path of consumption, and making possible a futures and options market (see Cramton and Kerr, 1998). This paper examines various internal economic instruments for a country to control carbon emissions: these include a carbon tax, a fully-auctioned permit system, or systems of allocating tradable permits to certain energy users. We concentrate on the United Kingdom, and employ a numerical simulation using a computable general equilibrium (CGE) model. Applicability to other countries will, of course, depend on the economic structure and pre-existing distortions. 1.1. Carbon permit allocation in the United Kingdom: the Marshall report Lord Marshall's report (Marshall, 1998) to the UK government on Economic instruments and the business use of energy recognises that a major argument for a permit scheme is that potential international trading could allow extra cutbacks in pollution to be made in those countries which have the lowest marginal abatement costs, and ‘sold’ to countries with higher marginal abatement costs. In theory, this should reduce the total abatement cost. The Kyoto protocol allows for such international trading to begin at the start of the commitment period in 2008. The report advocates company-to-company trading, on the grounds that ‘firms, not governments, are best able to spot abatement opportunities and best placed to decide whether it is most cost-effective in their interests to reduce their own emissions or buy permits’.9 However, Marshall admits ‘participation in trading will probably never extend to the small business sector’,10 due to high costs. Consequently, there is likely to be a two-tier system of carbon emission control, with large companies — perhaps those who currently participate in the Integrated Pollution Prevention and Control Directive (IPPC)11 — trading in permits, while smaller companies and households pay a carbon tax on fuel inputs. There are various possible allocation schemes. Large companies favour ‘grandfathering’, where permits are allocated free in proportion to companies’ emissions in a base year, and are resaleable. Such a scheme would bring objections concerning its competitive effects, which favour incumbent firms (and possibly undermine recent electricity market reforms), and concerning equity, as it involves handing out ‘windfall gains, in the shape of valuable permits, to failing companies or those who had been slow to act before’. A two-tier system, under which large firms would be given permits while small firms would pay a carbon tax, would discriminate against small firms, and favour manufacturing against services. An alternative is ‘benchmarking’, where firms are allocated permits according to an emissions target based on a regulator's judgement of best-practice for that industry (i.e. somewhat akin to the best available technology principle used in the IPPC directive). This would be fairer in terms of ensuring that all companies paid for carbon use, but more bureaucratic, and difficult to apply in less homogeneous sectors.12 Possibly the fairest method would be a public auction, which would also raise revenues, which could be recycled in various ways. This was the method Marshall preferred.

This paper has looked at various means of allocating carbon emission permits to large energy users, as a step towards participating in international permits. We looked, in particular, at the United Kingdom, and the current deliberations on how to meet the country's carbon emission commitments. Because of the complexity of the economic issues raised by a permit system, we have set up scenarios to look at grandfathering of permits as simply an internal matter, ignoring the issues associated with international trade in permits. Our model suggests that the emissions reductions envisaged for 2010 are unlikely to prove costly, and some of our scenarios indicate that there is a potential ‘double dividend’ if revenue from a permit auction is recycled to industry in the form of output subsidies or employment tax cuts.30 Our cost estimates for straightforward grandfathering, compared to an auction, are in line with the analyses of Cramton and Kerr, 1998, Parry et al., 1997 and Goulder et al., 1996 for the USA, or the SEO study of the Netherlands, among others. When permits are allocated free, the government is foregoing potential auction revenues, which could be used to reduce other taxes and associated distortions. The cost is increased if foreign-owned companies treat free permits as a windfall to repatriate to shareholders. However, our ‘benchmarking’ scenario indicates that the free allocation of permits is not necessarily costly. The use of benchmarking could make it possible to reallocate permits regularly, so that new entrants or companies wishing to expand output would expect soon to get a free allocation. This would mean there would be more incentive to expand output of energy-intensive industries in the country issuing the permits, and reduce consumer prices. GNP and welfare would actually be raised compared with the case where permits are auctioned and VAT reduced. This result is very tentative. Regular permit reallocation is only consistent with reducing emissions if it is possible to use some ‘benchmark’ estimate of energy consumption of an energy-efficient firm, rather than actual emissions. This may be easy where production processes are very standardised, but for other industries, the estimation of ‘best-practice’ could be costly and controversial. As Smith (1998) points out, regulatory capture is a potential problem of systems where the regulator allocating permits is dependent on firms for the necessary information. In addition, the competitive structure of the industry and ease of new entry would play a crucial part in determining whether the free allocation of permits becomes a windfall to incumbents or an encouragement to output. Recent UK reforms increasing competition or power generation and gas distribution may make benchmarking more viable than previously. In addition, the knowledge gained over recent years by regulators may make policing the energy efficiency of power plants more feasible. Overall, the costs of traditional grandfathering compared to auctioning the permits and recycling the revenue as output subsidies/tax cuts amount to approximately 1/4% of GNP, or £1250 million per annum in the UK. This more than squanders any potential double dividend from revenue recycling. Regular reallocation using benchmark estimates of carbon needs could potentially offset most of the losses from grandfathering, though it may prove difficult to implement, and is still probably not the most beneficial measure economically. A final point: the carbon emissions cuts agreed for 2010 (20% in the case of the UK), are likely to be only the beginning, as many studies, such as Schmalensee et al. (1998), indicate a need for much tighter controls beyond that date, especially given the expected rapid growth in carbon use outside the OECD area. This implies that taxes and permit prices could eventually rise far higher than the levels considered here — making the issues of allocation of permits and recycling of revenues potentially even more important.