Incentivizing Carbon Taxation in Low-Income Countries : Tax Rebating versus Carbon Crediting
Border carbon adjustments imply that high-income countries set taxes on energy-intensive imports that are proportional to the carbon content of these imports, to match their own carbon taxes. This paper considers the impacts of such a policy on exp...
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World Bank, Washington, DC
2021
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| Online Access: | http://documents.worldbank.org/curated/en/545441623698058077/Incentivizing-Carbon-Taxation-in-Low-Income-Countries-Tax-Rebating-versus-Carbon-Crediting http://hdl.handle.net/10986/35768 |
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okr-10986-357682021-06-18T05:10:56Z Incentivizing Carbon Taxation in Low-Income Countries : Tax Rebating versus Carbon Crediting Strand, Jon CARBON TAX BORDER CARBON ADJUSTMENT TAX REBATE CARBON CREDITING CARBON POLICY CARBON TAXATION Border carbon adjustments imply that high-income countries set taxes on energy-intensive imports that are proportional to the carbon content of these imports, to match their own carbon taxes. This paper considers the impacts of such a policy on exporter countries, many of which have no or very low carbon taxes today. The paper first studies a policy whereby the importer allows the exporter’s border tax to be reduced by its own comprehensive carbon tax (“tax rebating”). The analysis finds that the exporter is then incentivized to set its own comprehensive carbon tax at the same rate as the border tax, up to a maximal rate. When the border tax is higher, the exporter instead reduces its carbon tax. Border tax revenues of the high-income country can be returned to incentivize higher carbon taxes in the exporting countries (“carbon crediting”). When tax rebating is not allowed but tax revenues are fully returned, even higher exporter carbon taxes can then be incentivized, possibly exceeding $60 per ton of carbon dioxide in the numerical examples. Border taxation can give rise to export diversion away from border tax-setting countries, which reduces the scope for incentivizing the exporter’s carbon tax. The paper also studies how taxes on oil extraction by oil exporters can be incentivized by oil importing countries, by increasing their oil import prices above world market rates, or more efficiently through support to investments in exporters’ renewable energy capacity. 2021-06-17T16:24:03Z 2021-06-17T16:24:03Z 2021-06 Working Paper http://documents.worldbank.org/curated/en/545441623698058077/Incentivizing-Carbon-Taxation-in-Low-Income-Countries-Tax-Rebating-versus-Carbon-Crediting http://hdl.handle.net/10986/35768 English Policy Research Working Paper;No. 9698 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper |
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Digital Repository |
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Foreign Institution |
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Digital Repositories |
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World Bank Open Knowledge Repository |
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World Bank |
| language |
English |
| topic |
CARBON TAX BORDER CARBON ADJUSTMENT TAX REBATE CARBON CREDITING CARBON POLICY CARBON TAXATION |
| spellingShingle |
CARBON TAX BORDER CARBON ADJUSTMENT TAX REBATE CARBON CREDITING CARBON POLICY CARBON TAXATION Strand, Jon Incentivizing Carbon Taxation in Low-Income Countries : Tax Rebating versus Carbon Crediting |
| relation |
Policy Research Working Paper;No. 9698 |
| description |
Border carbon adjustments imply that
high-income countries set taxes on energy-intensive imports
that are proportional to the carbon content of these
imports, to match their own carbon taxes. This paper
considers the impacts of such a policy on exporter
countries, many of which have no or very low carbon taxes
today. The paper first studies a policy whereby the importer
allows the exporter’s border tax to be reduced by its own
comprehensive carbon tax (“tax rebating”). The analysis
finds that the exporter is then incentivized to set its own
comprehensive carbon tax at the same rate as the border tax,
up to a maximal rate. When the border tax is higher, the
exporter instead reduces its carbon tax. Border tax revenues
of the high-income country can be returned to incentivize
higher carbon taxes in the exporting countries (“carbon
crediting”). When tax rebating is not allowed but tax
revenues are fully returned, even higher exporter carbon
taxes can then be incentivized, possibly exceeding $60 per
ton of carbon dioxide in the numerical examples. Border
taxation can give rise to export diversion away from border
tax-setting countries, which reduces the scope for
incentivizing the exporter’s carbon tax. The paper also
studies how taxes on oil extraction by oil exporters can be
incentivized by oil importing countries, by increasing their
oil import prices above world market rates, or more
efficiently through support to investments in exporters’
renewable energy capacity. |
| format |
Working Paper |
| author |
Strand, Jon |
| author_facet |
Strand, Jon |
| author_sort |
Strand, Jon |
| title |
Incentivizing Carbon Taxation in Low-Income Countries : Tax Rebating versus Carbon Crediting |
| title_short |
Incentivizing Carbon Taxation in Low-Income Countries : Tax Rebating versus Carbon Crediting |
| title_full |
Incentivizing Carbon Taxation in Low-Income Countries : Tax Rebating versus Carbon Crediting |
| title_fullStr |
Incentivizing Carbon Taxation in Low-Income Countries : Tax Rebating versus Carbon Crediting |
| title_full_unstemmed |
Incentivizing Carbon Taxation in Low-Income Countries : Tax Rebating versus Carbon Crediting |
| title_sort |
incentivizing carbon taxation in low-income countries : tax rebating versus carbon crediting |
| publisher |
World Bank, Washington, DC |
| publishDate |
2021 |
| url |
http://documents.worldbank.org/curated/en/545441623698058077/Incentivizing-Carbon-Taxation-in-Low-Income-Countries-Tax-Rebating-versus-Carbon-Crediting http://hdl.handle.net/10986/35768 |
| _version_ |
1764483736566497280 |