Case studies of the potential effects of carbon taxation on the stone, clay, and glass industry

This case study focuses on the potential for a carbon tax ($25 and $100 per metric ton of carbon) to reduce energy use and associated carbon dioxide (CO[sub 2]) emissions in three subsectors of the stone, clay, and glass industry: hydraulic cement, glass and glass products, and other products. A conservation supply curve analysis found that (1) opportunities for reducing fossil fuel use in the subsectors are limited (15% reduction under $100 tax) and (2) the relationship between the tax and reduced CO[sub 2] emissions is nonlinear and diminishing. Because cement manufacturing produces a significant amount of CO[sub 2], this subsector was analyzed. A plant-level analysis found more opportunities to mitigate CO[sub 2] emissions; under a $100 tax, fossil fuel use would decrease 52%. (A conservative estimate lies between 15% and 52%). It also confirmed the nonlinear relationship, suggesting significant benefits could result from small taxes (32% reduction under $25 tax). A fuel share analysis found the cement industry could reduce carbon loading 11% under a $100 tax if gas were substituted for coal. Under a $100 tax, cement demand would decrease 17% and its price would increase 32%, a substantial increase for a material commodity. Overall, CO[sub 2] emissions from cement manufacturing would decrease 24--33% under a $100 tax and 10--18% under a $25 tax. Much of the decrease would result from the reduced demand for cement.