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Designing Permit Trading

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Green Taxation in Question
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Abstract

Chapter 5 suggested how green taxation could be designed to overcome political opposition. However, it was difficult to find appropriate green tax designs for heterogeneous industries because they would cause politically controversial redistribution among firms or sectors. Potential losers following redistribution would have strong incentives to oppose any such tax scheme and consequently, as argued in Chapter 1, the environmental results would be undermined. Therefore, we will now show how permit trading can overcome political opposition. This solution can be effected utilizing the main feature of ‘grandfathering’, where by the property right to emission rights is freely transferred on the basis of certain distribution rules (Tietenberg 1985).

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© 2001 Carsten Daugbjerg and Gert Tinggaard Svendsen

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Svendsen, G.T. (2001). Designing Permit Trading. In: Green Taxation in Question. Palgrave Macmillan, London. https://doi.org/10.1057/9780230595538_6

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