Neutralizing the Adverse Industry Impacts of CO2 Abatement Policies: What Does it Cost?

Abstract

The most cost-effective policies for achieving CO 2 abatement (e.g., carbon taxes) fail to get off the ground politically because of unacceptable distributional consequences. This paper explores CO 2 abatement policies designed to address distributional concerns. Using an intertemporal numerical general equilibrium model of the U.S., we examine how efficiency costs change when these policies include features that neutralize adverse impacts on energy industries.