scholarly journals Steering the Climate System: Using Inertia to Lower the Cost of Policy

2017 ◽  
Vol 107 (10) ◽  
pp. 2947-2957 ◽  
Author(s):  
Derek Lemoine ◽  
Ivan Rudik
Keyword(s):  
Carbon Emissions ◽  
Carbon Tax ◽  
Economic Models ◽  
Climate System ◽  
Carbon Taxes ◽  
Near Term ◽  
The Cost

Common views hold that the efficient way to limit warming to a chosen level is to price carbon emissions at a rate that increases exponentially. We show that this Hotelling tax on carbon emissions is actually inefficient. The least-cost policy path takes advantage of the climate system's inertia to delay reducing emissions and allow greater cumulative emissions. The efficient carbon tax follows an inverse-U-shaped path and grows more slowly than the Hotelling tax. Economic models that assume exponentially increasing carbon taxes are overestimating the cost of limiting warming, overestimating the efficient near-term carbon tax, and overvaluing technologies that mature sooner. (JEL H23, Q54, Q58)

The possible macroeconomic and sectoral impacts of carbon taxation on Turkey’s economy: A computable general equilibrium analyses

2018 ◽  
Vol 29 (5) ◽  
pp. 784-801
Author(s):  
Levent Aydın
Keyword(s):  
General Equilibrium ◽  
Carbon Emissions ◽  
Computable General Equilibrium ◽  
Carbon Tax ◽  
Model Simulation ◽  
Effective Means ◽  
Carbon Taxes ◽  
Rate Of Increase ◽  
Carbon Taxation ◽  
Per Capita

Although the idea of carbon tax was debated widely in the early 1970s, the first carbon taxes were imposed in some Northern European countries at the beginning of the 1990s. Since the Paris summit in 2015, there has been a growing interest in carbon tax that has begun to increase again. Although Turkey’s share of carbon emissions in terms of total global emissions is low, the rate of increase in emissions has increased in recent years and should be a cause for concern. Therefore, the aim of this paper is to analyze the possible effects of carbon taxes on Turkey’s economy by disaggregating the electricity sector a by using the computable general equilibrium model. Simulation results show that carbon taxation is a highly effective means to reduce carbon emissions. Despite all sectors being adversely affected, some low emission energy, textile, and other service sectors benefit from carbon pricing. The results also indicate macroeconomic costs of imposing a carbon tax at $7 per ton of carbon in terms of the decrease in GDP by 0.061% and associated with per capita utility of the representative household by 0.09% in scenario a. Imposition of successively higher carbon taxes in scenario b and scenario c results in 5.75, 12.02, and 16.95% reduction in carbon emissions at decreasing rate, respectively. However, these reductions are also accompanied by a decrease in real GDP and per capita utility from household expenditure, as macroeconomic costs, in scenarios a, b, and c at increasing rates.

scholarly journals Exploring the Role of Carbon Taxation Policies on CO2 Emissions: Contextual Evidence from Tax Implementation and Non-Implementation European Countries

2020 ◽  
Vol 12 (20) ◽  
pp. 8680 ◽  
Author(s):  
Assaad Ghazouani ◽  
Wanjun Xia ◽  
Mehdi Ben Jebli ◽  
Umer Shahzad
Keyword(s):  
Co2 Emissions ◽  
Carbon Emissions ◽  
Carbon Tax ◽  
Developing Economies ◽  
Pollutant Emissions ◽  
Carbon Taxes ◽  
Tax Reforms ◽  
Policy Tool ◽  
Carbon Dioxide Co2

During the past decades, environmental related taxes, energy, and carbon taxes has been recommended by environmental scientists as a policy tool to mitigate pollutant emissions in developed and developing economies. Among developed nations, Denmark, Finland, Sweden, the Netherlands, and Norway were the first regions to adopt a tax on carbon dioxide (CO2) emissions and research into the impacts of carbon tax on carbon emissions bring significant implications. The prime objective and goal of this work is to explore the role of carbon tax reforms for environmental quality in European economies. This is probably the first study to conduct a comparative study in European context for carbon-tax implementation and non-implementation policies. To this end, the present study reports new conclusions and implications regarding the effectiveness of environmental regulations and policies for climate change and sustainability. In the present study, the authors exhaustively explore the impacts of the carbon-tax on the mitigation of CO2 emissions. Using the propensity score matching method, the results of the estimation of the different matching methods allow us to observe a positive and significant impact of the adoption of the carbon-tax on stimulating the reduction of carbon emissions.

Controlling carbon emissions in China

1999 ◽  
Vol 4 (4) ◽  
pp. 493-518 ◽  
Author(s):  
RICHARD F. GARBACCIO ◽  
MUN S. HO ◽  
DALE W. JORGENSON
Keyword(s):  
Carbon Emissions ◽  
Computable General Equilibrium ◽  
Capital Accumulation ◽  
Carbon Tax ◽  
Chinese Economy ◽  
Carbon Taxes ◽  
Dual Nature ◽  
Long Run ◽  
Changing Patterns ◽  
Reduce Emissions

We examine the use of carbon taxes to reduce emissions of CO2 in China. To do so, we develop a dynamic computable general equilibrium (CGE) model of the Chinese economy. In addition to accounting for the effects of population growth, capital accumulation, technological change, and changing patterns of demand, we also incorporate into our model elements of the dual nature of China's economy where both plan and market institutions exist side by side. We conduct simulations in which carbon emissions are reduced by 5, 10, and 15 per cent from our baseline. After initial declines, in all of our simulations GDP and consumption rapidly exceed baseline levels as the revenue neutral carbon tax serves to transfer income from consumers to producers and then into increased investment. Although subject to a number of caveats, we find potential for what is in some sense a 'double dividend', a decrease in emissions of CO2 and a long run increase in GDP and consumption.

Tax Policy to Reduce Carbon Emissions in a Distorted Economy: Illustrations from a South Africa CGE Model

2011 ◽  
Vol 11 (1) ◽  
Author(s):  
Shantayanan Devarajan ◽  
Delfin S Go ◽  
Sherman Robinson ◽  
Karen Thierfelder
Keyword(s):  
South Africa ◽  
Developing Countries ◽  
Carbon Emissions ◽  
Computable General Equilibrium ◽  
Alternative Energy ◽  
Carbon Tax ◽  
Cge Model ◽  
Administrative Capacity ◽  
The Cost ◽  
The Impact

Abstract Noting that developing countries may not have the administrative capacity to levy a “pure” carbon tax, we compare the impact of alternative energy taxes with that of a carbon tax in an economy with multiple distortions. We use a disaggregated computable general equilibrium (CGE) model of the South African economy and simulate a range of tax policies that reduce CO2 emissions by 15 percent. Consistent with a “first-best” economy, a carbon tax will have the lowest marginal cost of abatement. But the relationship between a tax on energy commodities and one on pollution-intensive commodities depends critically on other distortions in the system and on structural rigidities in the economy. We demonstrate that if South Africa were able to remove distortions in the labor market, the cost of carbon taxation would be negligible. We conclude that the welfare costs of taxing carbon emissions in developing countries depend more on other distortions than on the country’s own carbon emissions.

scholarly journals Carbon Footprinting and Pricing Under Climate Concerns

2020 ◽  
pp. 002224292093293
Author(s):  
Marco Bertini ◽  
Stefan Buehler ◽  
Daniel Halbheer ◽  
Donald R. Lehmann
Keyword(s):  
Technology Adoption ◽  
Product Design ◽  
Carbon Footprint ◽  
Carbon Emissions ◽  
Carbon Tax ◽  
Green Technology ◽  
Firm Profitability ◽  
Corporate Carbon Footprint ◽  
The Cost ◽  
Insight Into

This article studies how organizations should design a product by choosing the carbon footprint and price in a market with climate concerns. The authors first show how the cost and demand effects of reducing the product carbon footprint determine the profit-maximizing design. Paradoxically, they find that stronger climate concerns may increase the overall corporate carbon footprint, even if the product itself is greener. Next, the authors establish that offsetting carbon emissions can create a win-win outcome for the firm and the climate if the cost of compensation is sufficiently low. Third, the authors show how regulation in the form of a cap-and-trade scheme or a carbon tax affects product design, firm profitability, and green technology adoption. Finally, the authors extend the analysis to a competitive scenario. Overall, these results can help marketing professionals by offering insight into how to address climate concerns through improved product design.

Introducing Carbon Taxes in Russia: The Relevance of Tax-Interaction Effects

2014 ◽  
Vol 14 (3) ◽  
pp. 723-754 ◽  
Author(s):  
Anton Orlov ◽  
Harald Grethe
Keyword(s):  
Carbon Tax ◽  
International Mobility ◽  
Carbon Taxes ◽  
Welfare Gains ◽  
Lump Sum ◽  
Corrective Effect ◽  
Carbon Taxation ◽  
Distortionary Taxes ◽  
Tax Interaction ◽  
The Cost

Abstract The theoretical literature on the double-dividend concept is mainly focused on pre-existing distortionary taxes in the labour and capital markets; the relevance of interactions with other taxes is often neglected. Using an analytical model and a numerical general equilibrium model, we analyse the welfare effects of carbon taxes and their interaction with other taxes applied in Russia. We find that substituting carbon taxes for labour taxes in Russia can substantially reduce the cost of carbon taxation compared to returning carbon tax revenues to households in lump-sum form and can even result in welfare gains in Russia. In conclusion, introducing carbon taxes has an indirect corrective effect with respect to the distorting effect of export taxation on energy resources. Furthermore, welfare costs of carbon taxation can be significant under the assumption of perfect international mobility of capital. Nevertheless, the cost can be more than compensated in case of a high carbon trade price.

scholarly journals Managing the energy trilemma in the Philippines

2021 ◽  
Vol 11 (1) ◽  
Author(s):  
Josef T. Yap ◽  
Aaron Joseph P. Gabriola ◽  
Chrysogonus F. Herrera
Keyword(s):  
Energy Policy ◽  
Carbon Emissions ◽  
Carbon Tax ◽  
International Energy Agency ◽  
The Philippines ◽  
Department Of Energy ◽  
Energy Agency ◽  
Trade Offs ◽  
World Energy ◽  
The Cost

Abstract Background The transition to an energy mix with lower carbon emissions is hampered by the existence of the so-called Energy Trilemma. The primary consequence is a trade-off between various objectives of energy policy, e.g., equity and sustainability. This conflict can lead to policy gridlock if policymakers are unable to prioritize the goals. This paper proposes a framework and methodology to manage the trilemma by applying methods related to multi-criteria decision-making in order to assign weights to the various components of the trilemma. Results Following the International Energy Agency (IEA), an expanded concept of energy security is adopted and translates to a version of the trilemma different from that of the World Energy Council. This study takes into account autarky, price, supply, and carbon emissions. The values of these variables are generated by a software called PLEXOS and are incorporated in a welfare function. Trade-offs and complementarities among the four variables are taken into account by the equations in the PLEXOS model. Meanwhile, weights for each of the components of the trilemma are obtained using the Analytical Hierarchy Process. The experts interviewed for this exercise are considered hypothetical heads of the Philippine Department of Energy (DOE). Conclusion Two scenarios were compared: a market-based simulation and one where a carbon-tax was imposed. As expected, the carbon-tax leads to a fall in the level of carbon emissions but a rise in the cost of electricity. Because the demand for electricity has a higher price elasticity among lower income classes, the carbon-tax will worsen equity. Attempting to resolve the conflict among the goals of energy policy is difficult leading to a possible gridlock. Policy options can, however, be ranked using the values generated by the welfare function. The ranking clearly depends on the preference or priorities of the hypothetical head of the DOE but at least a decision could be reached. In this manner, trade-offs are measured and the trilemma can be managed even if it is not resolved.

scholarly journals The Urbanisation Impacts on the Policy Effects of the Carbon Tax in China

2021 ◽  
Vol 13 (12) ◽  
pp. 6749
Author(s):  
Shuyang Chen
Keyword(s):  
Energy Consumption ◽  
Carbon Emissions ◽  
Computable General Equilibrium ◽  
Carbon Tax ◽  
Negative Impact ◽  
Positive Impact ◽  
Evaluation Framework ◽  
Socioeconomic Impacts ◽  
Policy Effects ◽  
Distributed Lag

In the literature, very few studies have focused on how urbanisation will influence the policy effects of a climate policy even though urbanisation does have profound socioeconomic impacts. This paper has explored the interrelations among the urbanisation, carbon emissions, GDP, and energy consumption in China using the autoregressive distributed lag (ARDL) model. Then, the unit urbanisation impacts are inputted into the policy evaluation framework of the Computable General Equilibrium (CGE) model in 2015–2030. The results show that the urbanisation had a positive impact on the GDP but a negative impact on the carbon emissions in 1980–2014. These impacts were statistically significant, but its impact on the energy consumption was not statistically significant. In 2015–2030, the urbanisation will have negative impacts on the carbon emissions and intensity. It will decrease the GDP and the household welfare under the carbon tax. The urbanisation will increase the average social cost of carbon (ASCC). Hence, the urbanisation will reinforce the policy effects of the carbon tax on the emissions and welfare.

scholarly journals Harnessing Wind Energy Potential in ASEAN: Modelling and Policy Implications

2021 ◽  
Vol 13 (8) ◽  
pp. 4279
Author(s):  
Youngho Chang ◽  
Phoumin Han
Keyword(s):  
Wind Energy ◽  
Carbon Emissions ◽  
Policy Implications ◽  
Wind Generation ◽  
Energy Potential ◽  
Trade Model ◽  
Electricity Trade ◽  
Generation Capacity ◽  
The Cost ◽  
Business As Usual

This study examines whether and how harnessing more wind energy can decrease the cost of meeting the demand for electricity and amount of carbon emissions in the Association for Southeast Asian Nations (ASEAN) region, using the ASEAN integrated electricity trade model. Three scenarios are considered: a counterfactual business-as-usual (BAU) scenario, which assumes no wind energy is used; an actual BAU scenario that uses the wind-generation capacity in 2018; and a REmap scenario, which employs the wind-generation capacity from the Renewable Energy Outlook for ASEAN. Simulation results suggest that dispatching more wind energy decreases the cost of meeting the demand for electricity and amount of carbon emissions. However, these emissions increase during the late years of the study period, as the no- or low-emitting energy-generation technologies are crowded out.

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