Environmental policies

Environmental issues are important drivers of policy. The government has targets to reduce greenhouse gas emissions, generate more renewable energy and raise more revenues from environmental taxes.

Research in this area examines whether environmental policies (in particular, environmental taxes and other economic instruments) are well designed to achieve their goals, how consumers might respond to such policies and what their distributional implications might be.

Factors associated with the presence of domestic energy efficiency measures in England

| Journal Articles

We use cross-sectional household survey data in England between 2002–03 and 2010–11 to explore potential barriers to ownership of three common energy efficiency measures (loft insulation, cavity wall insulation and full double glazing) in residential properties. There is little compelling evidence that credit constraints, as proxied by income, education or means-tested benefit receipt, inhibit ownership. Failures in landlord–tenant relationships, though, are a key issue: private renters are significantly less likely to have the measures in their homes than other tenure groups. More broadly, it is the characteristics of the dwelling rather than of the occupants which are most strongly related to the presence of the measures. However, relatively few factors are consistently associated with lower ownership rates over time and efficiency measures, suggesting that policies to encourage increased take-up may need to be tailored to the specific measure.

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Cheaper, greener and more efficient: rationalising UK carbon prices

| Journal Articles

Current UK energy use policies, which primarily aim to reduce carbon emissions, provide abatement incentives that vary by user and fuel, creating inefficiency. Distributional concerns are often given as a justification for the lower carbon price faced by households, but there is little rationale for carbon prices associated with the use of gas to be lower than those for electricity. We consider reforms that raise carbon prices faced by households and reduce the variation in carbon prices across gas and electricity use, improving the efficiency of emissions reduction. We show that the revenue raised from these reforms can be recycled in a way that ameliorates some of the distributional concerns. Whilst such recycling is not able to protect all poorer households, existing policy also makes distributional trade-offs, but does so in an opaque and inefficient way.

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Environmental taxation

| Video clip

This video and accompanying presentation slides draw on material given in a presentation to economics students, as part of a public economics series of lectures in December 2013 at the Institute for Fiscal Studies.

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