An official website of the United States government.

We've made some changes to EPA.gov. If the information you are looking for is not here, you may be able to find it on the EPA Web Archive or the January 19, 2017 Web Snapshot.

A Profile of Tax Subsidies and Investment Behavior in Six Major Polluting Industries (1997)

Paper Number: EE-0365

Document Date: 07/03/1997

Author(s):  Michaels, Greg, Akeson, Lisa, Wenner, Mark, Michaeli, Jonathan

Subject Area(s):

Economic Analysis, Pollution Control, Economic Incentives, Investment Subsidies, Tax Incentives

Keywords:  Economic Analysis, Pollution Control, Economic Incentives, Investment Subsidies, Tax Incentives

Abstract: 

The report seeks to review investment trends in pollution control technology to determine existing patterns and to highlight the likely investment incentives that six, highly polluting industries, metals mining, petroleum, primary metals, pulp and paper, chemicals and allied products, and electric utilities, may face if accelerated depreciation allowances, the largest subsidy currently available, were liberalized and reduced. Magnitudes of investment responses are not provided, only directions.  

The second section of the report identifies the major types of industrial subsidies that currently exist. Data are presented for each of the six highly polluting industries in order to determine which sector benefits are most for these allowances. The third section uses the U.S. Department of Commerce's data to disaggregate capital expenditures on pollution abatement in to two categories: end-of-line abatement investments and product process changes. In addition, industry-specific outlooks are presented with the purpose of identifying likely future investment trends and growth opportunities. The last section explains selected fundamental concepts in tax policy analysis, introduces the cost of capital formula and pinpoints likely investment incentives that may arise with a change in capital recovery allowances, the principal tax incentive.

This paper is part of the  Environmental Economics Research Inventory.

You may need a PDF reader to view some of the files on this page. See EPA’s About PDF page to learn more.
  • A Profile of Tax Subsidies and Investment Behavior in Six Major Polluting Industries (PDF)(72 pp, 14 MB, 07/03/1997, EE-0365)
    The report seeks to review investment trends in pollution control technology to determine existing patterns and to highlight the likely investment incentives that six, highly polluting industries, metals mining, petroleum, primary metals, pulp and pater, chemicals and allied products, and electric utilities, may face if accelerated depreciation allowances, the largest subsidy currently available, were liberalized and reduced.