Energy Carbon Tax Research Articles

THE EMISSIONS REDUCTION EFFECT AND ECONOMIC IMPACT OF AN ENERGY TAX VS. A CARBON TAX IN CHINA: A DYNAMIC CGE MODEL ANALYSIS

Carbon tax and energy tax are among the hot discussions in China. This study conducts simulation studies on them with a CGE model and analyzes their economic impacts, especially on the energy-intensive sectors. The Chinese economy is affected at an acceptable level by the two taxes in different scenarios. The import and export of energy-intensive industries are changed, leading to improved domestic competitiveness. Compared with implementing a single tax, a combined carbon-energy tax reduces more emissions with relatively smaller economic costs. For China, the sooner such taxes are launched, the smaller the economic costs and the more significant emission reductions.

Sera Gazı Emisyonlarının Azaltımında Karbon-Enerji Vergilerinin Rolü

Emission is defined as a mixture of gas or particles exposed to the atmosphere during various activites. It is a known fact that emissions of carbondioxide accumulating in the atmosphere depending on increasing fossil fuel use as a result of human activities will have a negative and lasting results on human health and environment if the global scale measures are not taken . Thus, the carbon-energy tax is important to reduce the amount harmful emissions to the environment and to ensure the industry’s tum to renewable energy sources within environmentel tax. In this study, the role of carbon-energy tax is studied for reducing greenhouse gas emmissions causing Global Warming and Climate Change. As a result of the assessments made, it is concluded that carbon-energy tax are not sufficiently effective or prevention of global warming and climate change because of exemptions for competition-sensitive and energy-intensive sectors, tax revenues are used for the purpose of providing public revenue instead of creating of new less carbonintensive tecnologies and non-global carbon-energy taxing applications are among the reasons for this situation.

Carbon-energy tax and emission permits to fight climate changes

This paper discusses the proposal of European Community to introduce a carbon- energy tax with the aim to curb greenhouse gas emissions. Nevertheless the relative successful of this initiative, the volatility of the prices of permits and firms free allocation of permits may undermine the achievement of the emissions permits goals. Therefore,the problem of global warming should be addressed using both quantity and price economic instruments, i.e. that the emission trading scheme should be complemented by a carbon-energy tax. Moreover, it is necesary to move towards a tax on consumption of carbon rather than on carbon production. Finally, environmental federalism could be seen as the direction for implementing the combined system of tax and permits.

AGE analysis of the impact of a carbon energy tax on the Irish economy

A computable general equilibrium model with specific detail in taxation and energy use is developed in this paper to quantify the impact of the implementation of energy taxation to reduce carbon dioxide emissions in Ireland. Benchmark data combining physical energy and emissions data and economic data in the form of a Social Accounting Matrix (SAM) had to be compiled from various data sources, because energy and pollution accounts from the SEEA are not available for Ireland. We find that the reduction target for energy related CO 2 emissions in Ireland of 25.8% compared to 1998 levels can be achieved with a carbon energy tax of 10–15 euros per tonne of CO 2. Though fuel switching is important in meeting the target, this result is more sensitive to the possibilities for producers to substitute away from energy use. Welfare would fall but only by small percentages. Production and consumption patterns would change more significantly, with a shift in demand from fuels with a high emission factor to energy sources with a lower carbon-intensity and from energy to other commodities. This paper confirms that a carbon energy tax leads to greater emission reductions than an equivalent uniform energy tax. The latter has a stronger negative impact on the less polluting energy sectors whereas the carbon tax greatly stimulates the use of renewable energy and reduces the use of peat and coal. The new SAM, the model and the application to energy taxes contribute to a better informed debate on environmental policy in Ireland.

Appendix A Department of Finance Press Release, September 10th, 2004. McCreevy Abandons Carbon Tax

The Minister for Finance, Mr Charlie McCreevy, T.D., announced today (10 September, 2004) that the Government has concluded its examination of carbon energy tax proposals and has decided not to introduce such a tax. “After an extensive public consultation process, the Government has concluded that a carbon tax is not an appropriate policy option. Instead, we will intensify action on the non‐tax measures under the National Climate Change Strategy”. The Minister added that “the Government is fully committed to the Kyoto Protocol and the international response to combat climate change and that Ireland will meet its greenhouse gas emissions reduction target under the Protocol.

The Welfare Effects of Carbon Taxation on Italian Households

We simulate the welfare effects of the Carbon-Energy Tax introduced in Italy at the beginning of 1999 which asks for smooth increases, over a number of years, in the prices of most fossil fuels. The welfare effects have been calculated using True Cost of Living index numbers and their parameters have been obtained through estimation of a demand system, using households-data from 1985 to 1996. The welfare loss at the aggregate level turns out to be quite substantial and affects Italian households in a non-negligible way, but the distribution of welfare losses across different levels of total monthly expenditures does not allow sustaining the regressivity of Carbon taxation, as the effect becomes bigger as we move up the income distribution. This evidence might encourage the use of Carbon Taxes as cost-effective instruments of environmental policy, especially after the recent negotiations on Climate Change. However, other important implications of Carbon taxation such as those on competitiveness and the environmental impact are not assessed in this study.

Rethinking the costs related to global warming: A survey of the issues

One approach to the economic analysis of global warming seeks to balance the costs of damage from or adaptation to it with the costs of mitigating it. The costs of adaptation and damage have been estimated using techniques of environmental evaluation, but are subject to a wide margin of uncertainty. The costs of mitigation, principally by reducing the emissions of CO2, have been estimated using different kinds of economic models, some of the results of which have suggested that very little abatement of carbon emissions is justified before the costs of abatement exceed the benefits of it in terms of foregone damage and adaptation costs. The paper analyses the extent to which this conclusion is a function of the modelling assumptions and techniques used, rather than likely practical outcomes, with regard to the models' treatment of unemployed resources, revenue recycling, prior distortions in the economy due to the tax system and possible dynamic effects from the introduction of a carbon-energy tax. It concludes that, with different and arguably more appropriate treatment of the above issues, especially when the secondary benefits of reducing CO2 emissions are also taken into account, it is not clear that even substantial reductions in the use of fossil fuels will incur net costs, especially if there is the prospect of even moderate costs from global warming.

The double dividend and the role of inequality aversion and macroeconomic regimes

The introduction of the European Community's carbon-energy tax in a small open economy is analyzed by comparing two kinds of revenue recycling. We use a dynamic general-equilibrium model with different regimes for the labor market, several income groups, and a crude valuation of environmental benefits. This allows for a more comprehensive empirical test of the double-dividend hypothesis, including equity aspects. It is shown that the weak double-dividend hypothesis can fail when equity aspects are taken into account.

European energy policy and global warming

AbstractA recent joint meeting of the EC Energy and Environment Councils failed to reach agreement on the need for a carbon energy tax despite long and intensive negotiations. However, the carbon tax is only one of the ways in which the EC could meet its CO2 emissions targets. Against this background, Michael Redclift discusses the nature of supply and demand for European energy and the nature of the energy policies which could be adopted.