@article{Honkatukia:331206,
      recid = {331206},
      author = {Honkatukia, Juha and Forsström, Juha and Tamminen, Eero},
      title = {Is there a Role for Domestic Energy Taxes under Emission  Trading?},
      address = {2004},
      pages = {15},
      year = {2004},
      note = {Presented at the 7th Annual Conference on Global Economic  Analysis, Washington DC, USA},
      abstract = {Energy taxes do not necessarily improve the cost  efficiency of emission trading, if they introduce price  signals that differ from those caused by trading. This  article studies the use of domestic energy taxes in the  trading sectors in connection with EU-wide emissions  trading in Finland. The study evaluates three distinct tax  scenarios that progressively switch further away from  current fuel taxes and compensate the initial loss of  revenue by raising either income taxes or electricity  taxes. Emission trading is studied for the period 2008-12.  Currently, the initial allocation of permits for this  period is yet to be determined; in the study,  grandfathering is assumed to base on estimated domestic  reductions that would result either from raising current  energy taxes or from introducing a complete carbon dioxide  tax. The results indicate that macroeconomic effects are  highest if revenue neutrality is maintained with income tax  increases. It makes less of a difference on the  macroeconomic level if current energy taxes are retained in  the trading sectors or if they are abolished and  electricity taxes raised to compensate for lost revenue. At  the sectoral level, however, the electricity tax  alternative is less costly for the trading sectors.  Grandfathering has a large impact on the effects of  abatement, since it determines the required reductions for  the non-trading sectors. If the goal for the non-trading  sectors is too strict, macroeconomic costs are raised  regardless of emission trading. Trading also has an effect  on the use of renewable energy. High permit prices are  required to encourage wind power, whereas the use of wood  increases in all cases.},
      url = {http://ageconsearch.umn.edu/record/331206},
}