Using Carbon Tax to Reach the U.S.’s 2050 NDCs Goals—A CGE Model of Firms, Government, and Households

Kejia Yan, Rakesh Gupta, Suneel Maheshwari

Research output: Contribution to journalArticlepeer-review

1 Citation (Scopus)
23 Downloads (Pure)

Abstract

Our study shows how the United States government can achieve its goal of Nationally Determined Contribution (NDC) in 2025, 2030, and 2050 by reducing energy consumption through a pure carbon tax. To achieve its emissions reduction goals, it is necessary for the U.S. to impose a long-term carbon tax that balances taxes on labour, capital, energy, and carbon. Therefore, in this study, through the two-layer CGE Cobb–Douglas model, the carbon tax rate is set while balancing the production and profit functions of government, businesses, and households. This study concludes that the carbon price will increase from USD 0.4391/kg CO2 in 2020 to USD 2.5671/kg CO2 in 2050, when the CO2 emissions reduction target is increased from 17% reduction in 2020 to 83% reduction in 2050 for the U.S.

Original languageEnglish
Article number317
Pages (from-to)1-30
Number of pages30
JournalJournal of Risk and Financial Management
Volume16
Issue number7
DOIs
Publication statusPublished - Jul 2023
Externally publishedYes

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