Adele Morris

Adele Morris heads the energy and climate change program at the Brookings Institution. She presented at ANU today on clean energy technology. This covered a lot of the same ground as my lectures in the CRWF 8000 course last semester and again later this semester so the video of her presentation will hopefully be useful for my students when it is available. She also mentioned a paper she coauthored with Warwick McKibbin and Peter Wilcoxen published in the Energy Journal late last year titled: Subsidizing Household Capital: How Does Energy Efficiency Policy Compare to a Carbon Tax?. The paper compares a tax credit for energy efficient household technology with an economy-wide carbon tax. The money raised by the carbon tax is similar to the tax-expenditure of the tax credit. But the effects on emissions are dramatically different. From the abstract:

"This study uses a general equilibrium model to compare environmental and economic outcomes of two policies: (1) a tax credit of 10 percent of the price of household capital that is 20 percent more energy efficient than its unsubsidized counterpart, assuming half of new household investment qualifies for the credit; and (2) a tax starting at $30 ($2007) per metric ton of CO2 rising five percent annually. By 2040, the carbon tax and tax credit reduce emissions by about 60 percent and 1.5 percent, respectively. ... Both policies have similar impacts on the federal budget, but of opposite signs."

The dramatic difference can be put down to the rebound effect. This shows how ineffective energy efficiency policy could be as I have explained before