Carbon Tax Rebates
A recent poll conducted by USA Today found that taxpayer support for a carbon tax rises “if the money is returned to them.” Only 34 percent of respondents initially said they would back a tax on fossil fuel emissions, but this number rose to 56 percent when polled about carbon tax programs that returned revenue to households in lump sum rebate checks.
New research by RFF’s Rob Williams, Hal Gordon, Dallas Burtraw, Richard Morgenstern, and Jared Carbone from the University of Calgary notes that the cost to the overall economy is higher when carbon tax revenues are returned as lump-sum rebates rather than via tax cuts (an option the poll didn’t include). Nonetheless, the study, which looks at the short-term effects of a carbon tax across income groups, shows that a carbon tax with lump-sum rebates is progressive, and that a majority of households would come out ahead under such a policy (even when ignoring any environmental benefits).
China’s Shale Challenges
China has sharply downgraded its expectations for future shale gas production from between 60 to 80 billion cubic meters (bcm) per year to 30 bcm per year by 2020. The country has the largest estimated proven shale reserves in the world, but “early exploration efforts to unlock the unconventional fuel [have proven] challenging” due to issues involving geology and production costs.
In a new discussion paper, RFF’s Zhongmin Wang and Alan Krupnick and their colleagues from the Energy Research Institute in Beijing suggest that the key to overcoming the innovation barriers for Chinese shale development may lie with the country’s national oil companies (NOCs). They write: “China’s NOCs enjoy overwhelming advantages over new entrants in terms of technology, experience, financial resources, and policy. The question is how to motivate the NOCs to invest in shale gas drilling.” In a blog post, they note that “Much like the US experience, China will need to first lower costs through investments in drilling and other innovations in order to become profitable enough to encourage further capital investment.”
