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Effects of U.S. TAX POLICY on Greenhouse Gas Emissions

Carbon Audit cover

In the context of ongoing debates about budget deficits and tax reform, climate change, and national energy policy, Congress asked the National Academies to review the entire Internal Revenue Code and identify the tax provisions that produce the largest increases or reductions in greenhouse gas (GHG) emissions and to estimate the magnitude of those effects. A committee comprised of experts in tax policy, economics, climate science, environmental law, energy and climate modeling found that current federal tax provisions have little net effect on GHG emissions. Read full report brief.

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  Project Information  

Media Coverage
Project Scope

Meetings
Reports
Members
Sponsors

 


MEDIA COVERAGE 

Perverse Effects: How Green Subsidies Often Increase Carbon Emissions
Wall Street Journal, August 20, 2013

New Study: Tax Subsidies Do Little to Reduce Greenhouse Gas Emissions
Tax Policy Center, July 1, 2013

Federal Report Backs Carbon Tax for Climate Goals
El Politico, June 21, 2013

Tax Code a Wash When It Comes to Curbing Carbon -- Report
Environment and Energy Publishing, June 20, 2013

U.S. Tax Code is 'Poor GHG Reduction Tool'
Environmental Leader, June 20, 2013

Obama Could Unveil Climate Strategy with Clean Air Act Tie Soon
National Geographic, June 20, 2013

Study Finds Energy Tax Incentives Have Little Impact on Carbon Emissions
CQ News - Policy, June 20, 2013

Report: Taxpayers Lost $48 Billion subsidizing Failed Efforts to Reduce Greenhouse Gas Emissions
junkScience.com, June 20, 2013

PROJECT SCOPE 

This consensus study will identify the types of and specific tax provisions that have substantial effects on the emission rates of carbon dioxide and other greenhouse gases, and to the extent possible will rank the magnitudes of those effects.

The report will first determine the most appropriate analytical framework and methodology to use in examining the effects of the tax code on greenhouse gas emissions.  It will consider both provisions that may increase emission rates as well as those having the effect of lowering them over specific periods, and both direct (e.g., fuel-related provisions) and indirect measures (e.g., the home mortgage deduction and the investment tax credit).   Studying the tax code’s impact on GHG emissions the report will focus heavily on energy, both the life cycles of different energy sources and their uses in different sectors such as electricity generation, transportation, industrial processes, and consumer uses (including in households).  The report may extend to areas beyond energy, such as agriculture, forestry, urban development, and other land uses which can have significant effects on GHG emissions.

The final report will not recommend particular new taxes or tax incentives nor changes in existing provisions of the tax code but will outline principles and criteria for formulating climate-sensitive tax policy in the future.  It may evaluate the efficiency and effectiveness of different tax measures in reducing GHG emissions relative to other policy instruments.

MEETINGS

Meeting 5: September 21, 2012 (closed)
Meeting 4: July 10-11, 2012 (closed)
Meeting 3: April 10-11, 2012 (closed)
Meeting 2: October 6-7, 2011
Meeting 1:  April 28-29, 2011++ 

Reports

Report was released on June 20, 2013. It is available for purchase or as a free PDF at http://www.nap.edu/catalog.php?record_id=18299.  

Members

Dr. William D. Nordhaus - (Chair)
Yale University
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WILLIAM D. NORDHAUS is Sterling Professor of Economics at Yale University. He completed his undergraduate work at Yale University in 1963 and received his Ph.D. in Economics in 1967 from the Massachusetts Institute of Technology, Cambridge, USA. He has been on the faculty of Yale University since 1967 and has been Full Professor of Economics since 1973. He is also Professor in Yale’s School of Forestry and Environmental Studies.

Nordhaus is a member of the National Academy of Sciences and a Fellow of the American Academy of Arts and Sciences. He is on the research staff of the National Bureau of Economic Research, the Cowles Foundation for Research, and has been a member and senior advisor of the Brookings Panel on Economic Activity, Washington, D.C. since 1972. Professor Nordhaus is current or past editor of several scientific journals and has served on the Executive Committees of the American Economic Association and the Eastern Economic Association. He serves on the Congressional Budget Office Panel of Economic Experts and was the first Chairman of the Advisory Committee for the Bureau of Economic Analysis. He was the first Chairman of the newly formed American Economic Association Committee on Federal Statistics. In 2004, he was awarded the prize of “Distinguished Fellow” by the American Economic Association.

From 1977 to 1979, he was a Member of the President's Council of Economic Advisers. From 1986 to 1988, he served as the Provost of Yale University. He has served on several committees of the National Academy of Sciences including the Committee on Nuclear and Alternative Energy Systems, the Panel on Policy Implications of Greenhouse Warming, the Committee on National Statistics, and the Committee on the Implications for Science and Society of Abrupt Climate Change. He recently chaired a Panel of the National Academy of Sciences that produced a report, Nature's Numbers, that recommended approaches to integrate environmental and other non-market activity into the national economic accounts.

He is the author of many books, among them Invention, Growth and Welfare, Is Growth Obsolete?, The Efficient Use of Energy Resources, Reforming Federal Regulation, Managing the Global Commons, Warming the World, and (joint with Paul Samuelson) the classic textbook, Economics, whose nineteenth edition was published in 2009. His research has focused on economic growth and natural resources, the economics of climate change, as well as the resource constraints on economic growth. Professor Nordhaus has also studied wage and price behavior, health economics, augmented national accounting, the political business cycle, and productivity.

Dr. Maureen L. Cropper
University of Maryland, College Park
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MAUREEN L. CROPPER is professor of economics at the University of Maryland, former lead economist at The World Bank, and research associate at the National Bureau of Economic Research. Dr. Cropper’s research has focused on valuing environmental amenities (especially environmental health effects), on the discounting of future health benefits, and on the tradeoffs implicit in environmental regulations. Her recent research analyzes the externalities associated with motorization and the interaction between residential location, land use and travel demand. Dr. Cropper is a member of the National Academy of Sciences. She also is past president of the Association of Environmental and Resource Economists and a former chair of the Advisory Council for Clean Air Act Compliance Analysis, a subcommittee of EPA's Science Advisory Board. Dr. Cropper has served on the advisory boards of Resources for the Future, the Harvard Center for Risk Analysis, the Donald Bren School of the Environment and the AEI-Brookings Center on Regulation. She received her Ph.D. in economics from Cornell University.

Mr. Francisco C. de la Chesnaye
Electric Power Research Institute, Inc.
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FRANCISCO de la CHESNAYE is Senior Project Manager at the Electric Power Research Institute. He was previously Chief of the Climate Economics Branch at the U.S. EPA., responsible for developing and applying EPA’s economic models for developing GHG emission projections, conducting mitigation analysis, and assessing issues related to long-term scenarios of economic development, GHG emissions, and climate change. He is an expert in emissions and mitigation analysis of non-CO2 greenhouse gases (NCGGs) including methane, nitrous oxide, and various fluorinated compounds. His expertise covers engineering-economic (bottom-up) modeling, working with climate economic and integrated assessment modelers to incorporate NCGGs and sinks into their analyses, and developing long-term emission scenarios. Internationally, Mr. de la Chesnaye has furthered the study of climate change mitigation by coordinating efforts to advance the analysis of multi-sector and multi-gas mitigation, including serving as co-chairman for the Stanford Energy Modeling Forum’s study on Multigas Mitigation (EMF-21) which was published in The Energy Journal. Mr. de la Chesnaye also co-edited a book titled Human-Induced Climate Change: An Interdisciplinary Assessment (2007). Mr. de la Chesnaye also was a Lead Author for Working Group III of the IPCC’s Fourth Assessment Report. He holds graduate degrees in Environmental Science from Johns Hopkins University and in Economics from American University.

Dr. Noah Diffenbaugh
Stanford University
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NOAH DIFFENBAUGH is assistant professor of Environmental Earth System Science and Center Fellow, Woods Institute for the Environment, at Stanford University. Professor Diffenbaugh’s research focuses on the dynamics and impacts of climate variability and change, including the role of humans as a coupled component of the climate system. These interests span a range of spatial and temporal scales, and a number of climate system processes. Much of his work has focused on the role of fine-scale processes in shaping phenomena such as extreme weather, climate-vegetation feedbacks, atmospheric forcing of the coastal ocean, and Holocene climate variability. He also investigates the potential impacts of greenhouse-induced climate changes on natural and human systems, including on water resources, agricultural pests, premium wine production, human health, and poverty vulnerability.
Dr. Diffenbaugh serves on the Executive Committee of the Atmospheric Sciences Section of the American Geophysical Union, as an Editor of Geophysical Research Letters, and as a Lead Author for Working Group II of the Intergovernmental Panel on Climate Change. He is a member of the National Center for Ecological Analysis and Synthesis working group on Terrestrial Ecosystems and Climate Policy, and is a participant in the international Regional Climate Network (RegCNET) and NCAR CCSM Working Groups. He has provided scientific briefings to State and Federal lawmakers, and was a contributor to SAP 3.4 of the U.S. Climate Change Science Program assessment (2008). In 2011, Google named Diffenbaugh one of its inaugural class of Science Communication Fellows. Before coming to Stanford, he was a member of the faculty of Purdue University, where he was a University Faculty Scholar and served as Interim Director of the Purdue Climate Change Research Center.

Mr. David G. Hawkins
Natural Resources Defense Council
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DAVID G. HAWKINS is Director of the Natural Resources Defense Council (NRDC) Climate Center, which focuses on advancing policies and programs to reduce pollution responsible for global warming and harmful climate change. He has also been director of the NRDC Air and Energy Program and was co-director of the NRDC Clean Air Program. He initiated the NRDC Clean Air Project in 1971, which has influenced the federal Clean Air Act since the law's passage. He has worked at the Stern Community Law Firm in Washington, D.C., and served as assistant administrator for air, noise, and radiation at EPA from 1977 to 1981. He served as a member of the National Research Council Board on Energy and Environmental Systems and committees to Review the Structure and Performance of the Health Effects Institute and to study the Energy Futures and Air Pollution in Urban China and the United States. He has extensive public policy and regulatory experience related to air quality, climate change, and related energy supply and demand issues.

Ms. Roberta F. Mann
University of Oregon
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ROBERTA MANN is professor of law and Dean's Distinguished Faculty Fellow at the University of Oregon School of Law. A recognized tax law expert, she has written extensively on how tax policy affects the environment. Professor Mann earned her B.S., M.B.A. and J.D., cum laude, from Arizona State University, where she also served as assistant editor of the Arizona State University Law Journal. In 1995, she received her LL.M. in taxation, with distinction, from Georgetown University Law Center. Prior to entering academia, Professor Mann practiced in the Office of Chief Counsel of the Internal Revenue Service, concentrating primarily on the areas of partnerships, corporate, estate and gift, and natural resources. She also served on the Staff of the Joint Committee on Taxation in U.S. Congress.

Dr. Brian C. Murray
Duke University
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BRIAN MURRAY is director of economic analysis at Nicholas Institute for Environmental Policy Solutions. Murray is widely recognized for his work on the economics of climate change policy, including the design of cap-and-trade policy elements to address cost containment and inclusion of offsets from traditionally uncapped sectors such as forestry and agriculture. He routinely advises members of the United States Congress and their staff on climate change legislative proposals. He is currently leading an effort to develop protocols and methods for reduced emissions from deforestation and degradation (REDD) in the Amazon region. Dr. Murray has been invited as a co-author of several national and international assessments of forest resources, especially related to climate change. Of particular note, he was a convening lead author of the Intergovernmental Panel on Climate Change’s Special Report on Land Use, Land Use Change, and Forestry. He has convened several forums of economic modeling experts to examine and communicate the results of their climate, energy and land use policy efforts to the public and private sectors. His research has examined the economic effects of traditional command-based regulatory strategies for pollution control and more market-oriented approaches such as cap-and-trade programs and emission taxes. His work has been published in books, edited volumes, and professional journals. Prior to coming to the Nicholas Institute in 2006, Dr. Murray was Director of the Center for Regulatory Economics and Policy Research at RTI International, a university-affiliated not-for-profit research institution.

Dr. John M. Reilly
Massachusetts Institute of Technology
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JOHN M. REILLY is an energy, environmental, and agricultural economist who focuses on understanding the role of human activities as a contributor to global environmental change and the effects of environmental change on society and the economy. A key element of his work is the integration of economic models of the global economy as it represents human activity with models of biophysical systems including the ocean, atmosphere, and terrestrial vegetation. By understanding the complex interactions of human society with our planet, the goal is to aid in the design of policies that can effectively limit the contribution of human activity to environmental change, to facilitate adaptation to unavoidable change, and to understand the consequences of the deployment of large scale energy systems that will be needed to meet growing energy needs.

Dr. Drew Shindell
Goddard Institute for Space Studies
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DREW SHINDELL is a senior scientist at the National Aeronautics and Space Administration’s Goddard Institute for Space Studies. Dr. Shindell researches climate change, with a focus on atmospheric chemistry. An expert on modeling the impact of emissions changes, Shindell’s work has investigated how the atmospheric chemical system has important effects on humans through pollutants such as smog or particulates, through acid rain, and through stratospheric ozone change, and how climate can be altered by greenhouse gases, solar variability, volcanic eruptions, aerosols, and ozone, and what impacts changes in climate and air quality may have on society.

Dr. Shindell serves as a coordinating lead author for the Intergovernmental Panel on Climate Change’s Fifth Assessment Report on global climate change. He earned his Ph.D. at Stony Brook University.

Dr. Eric Toder
The Urban Institute
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ERIC TODER is an Institute Fellow at the Urban Institute and co-director of the Urban-Brookings Tax Policy Center. Dr. Toder’s recent work includes papers on value added taxes, the home mortgage interest deduction, the distributional effects of tax expenditures, corporate tax reform, charitable tax incentives, taxation of saving, the tax gap, effects on retirement income of changes in pension coverage and stock prices, employing older workers, and energy tax incentives. Dr. Toder previously held a number of positions in tax policy offices in the U.S. government and overseas, including service as Deputy Assistant Secretary for Tax Analysis at the U.S. Treasury Department, Director of Research at the Internal Revenue Service, Deputy Assistant Director for Tax Analysis at the Congressional Budget Office, and consultant to the New Zealand Treasury. He earned his Ph.D. in economics from the University of Rochester in 1971.

Dr. Roberton C. Williams
University of Maryland, College Park
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ROB WILLIAMS studies both environmental policy and tax policy, with a particular focus on interactions between the two. He is an associate professor at the University of Maryland, College Park, senior fellow and director of academic affairs at Resources for the Future, and a research associate of the National Bureau of Economic Research. He also serves as a co-editor of the Journal of Public Economics, editorial council member (and former co-editor) of the Journal of Environmental Economics and Management and member of the editorial board of the B.E. Journal of Analysis & Policy.

He was previously an associate professor at the University of Texas at Austin, a visiting research scholar at the Stanford Institute for Economic Policy Research, and an Andrew W. Mellon fellow at the Brookings Institution.

Dr. Catherine Wolfram
University of California, Berkeley
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CATHERINE WOLFRAM is associate professor of business administration at the Haas School of Business at the University of California, Berkeley. She also serves as co-director of the Energy Institute at Haas and is a member of the Haas School’s Economic Analysis & Policy Group. Professor Wolfram studies the economics of energy markets and has examined the impact of environmental regulation on energy markets and the effects of electricity industry privatization and restructuring around the world.

She earned her Ph.D. in economics from the Massachusetts Institute of Technology.  

Sponsors

The project is sponsored by the U.S. Department of Treasury pursuant to P.L. 110-343, Division B, Title I, Sec. 117 and P.L. 111-117, Division C, Title I, Sec. 126 which directed the Treasury Department to arrange for the study with the Academies.