American Economic Review Vol. 98 No. 2 2008
Using Tax Expenditures to Achieve Energy Policy Goals
Abstract
Tax expenditures are a major source of support for energy related to activities in the federal budget exceeding direct budget support for energy by a factor of nearly six. Focusing on the policy goals of reducing greenhouse gas emissions and petroleum consumption, I find these tax expenditures highly cost ineffective at best and counterproductive at worse. The tax credit for ethanol is an example of a cost ineffective subsidy. The cost of reducing CO2 emissions through this subsidy exceeded $1,700 per ton of CO2 avoided in 2006 and the cost of reducing oil consumption over $85 per barrel.
- DOI
- 10.1257/aer.98.2.90
- Volume
- 98
- Issue
- 2
- Pages
- 90-94
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref