Carbon Pricing Policies Research Articles

An Evaluation on Sectoral Competitiveness of Guangdong in China: The Role of Carbon Taxation Policy

Given the spatial heterogeneity of the social-economic situations across different regions in China, the decomposition of emission reduction targets should be designed according to the actual characteristics of the industrial economy. There is concern about the loss of industrial competitiveness and leakage of CO2 emissions if just seven pilot carbon markets operate independently, so the national carbon market of the power sector was established in 2021. In this study, a China two-region CGE model including Guangdong (GD) and the rest of China (ROC) is built on an analysis of the long-term effects of CO2 prices in industrial sectors at the target 2030 peak. Based on this model, we constructed one business-as-usual scenario and six comparison carbon tax scenarios to quantify the CO2 cost impact for a wide range of manufacturing sectors and identify specific economic activities that face relatively high CO2 costs between the two regions. Based on the China two-region CGE model, the risks of leakage and competitiveness distortions in these potentially exposed sectors are qualitatively assessed. The results show that chemical, nonferrous metal, and machinery are GD’s competitive sectors, and agriculture, food, textile, paper, cement, construction, and service belong to ROC’s competitive industry. Both GD and ROC need to further unify carbon pricing policies at the same time to effectively coordinate the carbon intensity reduction target and industrial development, which is 2.6% and 3.2% of the severe GDP loss compared with BaU when implementing carbon tax policy. The results can support the setting of the carbon tax and industrial competitiveness promotion policy and with a strong reference to support the provincial emission reduction path.

Price elasticity of CO2 emissions in China: A machine learning approach

Quantifying the impacts of carbon prices on urban CO2 emissions is imperative to developing individualized carbon pricing schemes in China's emission trading systems (ETSs). Based on a prefecture-level panel dataset from 2005 to 2017, we use a machine learning approach to predict the individual price elasticities of CO2 emissions for 284 cities in China. The results exhibit significant heterogeneity in price elasticities: The full distribution of price elasticities indicates a right-skewed and leptokurtic characteristic, with an average price elasticity of −4.0 % and −3.6 % in CO2 emissions and CO2 intensity, respectively. We further find that the key city characteristics in predicting price elasticities are population density, industrial structure, and the number of industrial firms. Using the predictions of price elasticities, we conclude with a simulation to illustrate how different carbon pricing policies can help reduce carbon emissions at the national level. The results have important policy implications for China aiming to address low-carbon issues through carbon pricing.

Can Inner Mongolia Learn from Zhejiang’s Low-Carbon Policy?—Comparative Analysis Based on the EPS Model

Based on the energy policy simulation model (EPS model) and the reality of Zhejiang Province and Inner Mongolia Autonomous Region, the carbon pricing policy scenario and the early retirement policy scenario of coal power generation units were constructed, respectively, and the policy effects simulated. The study explored whether Inner Mongolia Autonomous Region can learn from the low-carbon policies that have played a good role in Zhejiang Province in the process of achieving a carbon peak. The research found that: (1) Under the baseline scenario, both Zhejiang Province and Inner Mongolia Autonomous Region failed to achieve a carbon peak by 2030. (2) Under the scenarios of carbon pricing and early retirement of coal power generation units, the peak time of carbon in Zhejiang Province and Inner Mongolia Autonomous Region has been advanced, which shows the effectiveness of carbon pricing and early retirement of coal power generation units. (3) The above two policies have achieved good results in the overall implementation process of Zhejiang Province, but the carbon pricing policy has caused dramatic fluctuations in the power generation in Inner Mongolia Autonomous Region, and the early retirement policy of coal power units has failed to achieve the goal of reaching the peak carbon in Inner Mongolia Autonomous Region on schedule.

A Comparative Study of Carbon Pricing Policies in China and the Scandinavian Countries: Lessons for Effective Climate Change Mitigation with a Focus on Sweden

Under the Paris Agreement's goal of limiting global warming to 1.5 degrees by 2100, nations are taking steps to reduce carbon emissions. Carbon pricing is a popular policy instrument to mitigate carbon emissions. This paper presents a comparative analysis of carbon pricing policies in China and Scandinavian countries (Norway, Denmark, and Sweden), focusing on their impacts on the transportation, industrial, and building sectors. The study highlights that both regions have successfully implemented carbon pricing policies, combining carbon taxes with emissions trading systems, resulting in significant emissions reductions and decoupling of economic growth from greenhouse gas emissions. In the transportation sector, carbon pricing policies have driven the adoption of electric vehicles and cleaner fuels. In the industrial sector, these policies have led to investments in energy efficiency, fuel switching, and low-carbon technologies. In the building sector, carbon pricing has encouraged energy efficiency improvements and the adoption of low-carbon heating technologies. The paper underscores the importance of integrating carbon pricing policies with other energy and environmental policies, fostering public engagement, and designing robust monitoring, reporting, and verification systems to ensure their effectiveness in promoting low-carbon development.

Carbon pricing policies in China: Comparative analysis of carbon tax and emission trading systems

Carbon pricing has gained significant attention as a market-based approach to tackle carbon emissions and mitigate climate change. In the context of China, the world's largest emitter of carbon dioxide, the implementation of effective carbon pricing policies is of paramount importance. This paper conducts a comparative analysis of China's two primary carbon pricing mechanisms: the carbon tax and the emission trading system (ETS). The analysis delves into the design, implementation, and outcomes of both policies, assessing their effectiveness, challenges, and potential for achieving carbon emission reduction targets. By examining case studies, policy documents, and empirical data, this study aims to provide insights into the strengths and weaknesses of each policy approach, offering recommendations for policymakers and stakeholders to optimize China's carbon pricing strategy and contribute to global climate goals.

Fertility and climate change*

AbstractA quarter of the total increase in emissions is attributable to the growth of emissions per capita, whereas three‐quarters are due to population growth. This evidence notwithstanding, demography in climate–economy models typically follows exogenous trends. We develop a climate–economy integrated model with endogenous fertility through a quality–quantity trade‐off. The decentralization of the social optimum requires two complementary instruments: a carbon pricing policy and family planning interventions. Global population increases and reaches a peak, depending on the scenario, between 11.6 billion in the social optimum and 14.6 billion if only carbon prices are implemented. Fertility costs (i.e., the net present value of the climate‐related costs per child) are in 2020 estimated to be about 22,000 euros in the “social optimum” scenario, and about 88,000 euros in the “second‐best with fertility taxes” scenario. Carbon pricing tends to have a rebound effect as it increases population growth leading to higher future emissions. Our results highlight the effects of fertility choices and global population on climate change, quantifying the cost of neglecting the interaction.

Carbon pricing world wide

The article deals with the features of existing carbon pricing policies in different countries. While some countries have only a carbon tax and others a cap-and-trade system, there are jurisdictions that combine them. The differences in the existing cap-and-trade systems and carbon taxes in selected countries — both in terms of sectors and emissions covered, as well as carbon prices are shown. As it appeared to be at least 70 different carbon pricing initiatives at the national and subnational levels, they cover less than ¼ of global GHG emissions. Examples of fuel excise tax — still most common indirect carbon pricing mechanism in the world — are highlighted. The assessment by international organizations and national agencies of effective carbon rates are given, which vary by countries and potential effects for the global decarbonization. According to the working assumption, effective climate change policies must include a mix of regulatory actions combining restrictions and control over emissions as well as economic incentives. This article describes mechanisms of bilateral and international cooperation on emission pricing and provides examples of voluntary standards for verification and validation of climate change projects. Despite proposals of different international organizations, there has been no agreement so far on an international carbon price floor. However, in 2021, negotiators closed a deal setting global rules for carbon markets, allowing countries that have emission units to trade them. The world’s first major carbon border tax — a Carbon Border Adjustment Mechanism (CBAM) will introduce a carbon price on certain products imported into the EU.

Heterogeneity in Expert Recommendations for Designing Carbon Pricing Policies Across the Globe

Heterogeneity in Expert Recommendations for Designing Carbon Pricing Policies Across the Globe

Equity of Carbon Pricing Policies in Mitigating Climate Change: A Comparative Study of Different Policy Designs

Carbon pricing policies are investigated for their efficacy and fairness in reducing greenhouse gas emissions in Asian nations. Through an examination of various policy frameworks, we conclude that carbon pricing policies are the most promising for lowering global warming pollution. However, the distributional effects of these policies on family income are not uniform. We find that rebates or investment in renewable energy are effective revenue recycling methods for reducing the regressive impact of carbon pricing policies on low-income households. In addition, it may be easier to reach climate targets if policy designs put an emphasis on lowering emissions rather than increasing income. These results indicate that carbon pricing policies may play a significant role in reducing the effects of global warming, but that they must be designed with equity considerations in mind to be both successful and fair. Policymakers can benefit from more information about the design and implementation of carbon pricing policies across sectors, income groups, and regions in order to successfully mitigate climate change while assuring their equity.

Applying Machine Learning to Estimate the Impact of Carbon Pricing on Company Financials

Implementing carbon pricing policies, such as carbon taxes and cap-and-trade systems, carries substantial financial consequences for companies operating in diverse industries. The precise evaluation of the effects of these policies is essential for businesses and investors in mitigating risks and making wellinformed choices effectively. The present white paper investigates the utilization of machine learning methodologies to estimate the financial ramifications of carbon pricing on corporations across diverse sectors. The development and evaluation of machine learning models that capture industry-specific factors and dynamics are achieved through company financial data, emissions data, and scenario variables. The paper examines the difficulties and constraints associated with these models, such as data accessibility, the interpretability of the models, and their ability to be applied to different sectors. Additionally, we offer suggestions for potential improvements and the incorporation of other risk assessment tools in the future. Our study’s results showcase machine learning’s capacity to facilitate well-informed decision-making regarding carbon pricing and climate risk handling.

Accelerating emission reduction in Israel: Carbon pricing vs. policy standards

The implementation of a carbon pricing policy to comply with GHG emission targets faces opposition in small economies. An integrated modeling exercise was carried out for Israel to assess the cost-effectiveness of GHG emission reduction options. Alternative policies in terms of carbon pricing and policy standards are evaluated. The results show that modest carbon pricing is effective. It achieves a 67% reduction in emissions, by 2050 relative to the reference year 2015, while having only a minor impact on economic growth. Policy standards currently proposed by the government will only reach a 40% emissions reduction in the same timeframe. Clean energy standards not coupled with carbon pricing may hinder efficiency but have a lesser impact on income distribution.

ANALYSIS THE EFFECTIVENESS OF IMPLEMENTATION CARBON TAX IN INDONESIA

The Indonesian government made a commitment to combating climate change through the introduction of a carbon tax, which the law controlled in harmonizing tax rules UU HPP No.7 Year 2021 in order to reduce greenhouse gases and reach net zero emission in Year 2060. Indonesia delayed the introduction of the carbon tax on April and July 2022, but it still intends to do so in stages in accordance with the road map, the growth of the carbon market, the NDC target, and stable economic conditions. This research aims to describe the effectiveness of implementation carbon tax in Indonesia. Technique analysis data use literature review with descriptive qualitative data analysis and comparative research methodology. The research found that it is crucial to guarantee that carbon price regulation is in place as a management tool to alter behavior and promote innovation and changes in how businesses are managed, particularly those that produce significant amounts of carbon emissions. Due to a lack of alternatives using renewable technology and efficient carbon pricing policies, businesses would be reluctant to change and invest in sustainable business models. Indonesia's carbon tax rate also raises many questions about its effectiveness for changing behavior toward low emission development.

Combined Cycle, Heat Pump, and Thermal Storage Integration: Techno-Economic Sensitivity to Market and Climatic Conditions Based on a European and United States Assessment

Abstract The integration of a heat pump (HP) with a combined cycle gas turbine (CCGT) to control the inlet air temperature is a promising technology to meet the requirements imposed by the current electricity systems in terms of efficiency and flexibility. If the HP is coupled with a thermal energy storage (TES) in an inlet conditioning unit (ICU), it can be exploited in different modes to enhance the off-design CCGT's efficiency or to boost the power output at full load. Furthermore, fuel-saving would be reflected in avoided emissions. The optimal sizing of the ICU, as well as an accurate estimation of the benefits, is a complex problem influenced by several factors such as the local climate and electricity market prices. This paper aims to systematically investigate, utilizing a mixed integer linear programming (MILP) model for optimal dispatch, the feasibility of an ICU integration in different scenarios (EU and US). Different electricity markets have been analyzed and classified according to the parameters describing the average and variability of prices, the interdependency with the gas market, the ambient temperature, or the local carbon pricing policy. The most favorable conditions are identified and the dependency of the optimal ICU sizing on the climate and the electricity market is highlighted. This paper provides information for a first viability assessment: the concept appears to be highly profitable in hot regions with high price variability. Additionally, even in less profitable conditions (i.e., stable low prices in a cold climate), the system increases operating hours and reduces economic losses.

Effects of scenario-based carbon pricing policies on China's dual climate change mitigation goals: Does policy design matter?

Although the carbon pricing policy is a critical driving factor that will help China achieve economic growth, energy transition, and dual climate change mitigation goals, the kind of carbon pricing policy that will complement the country's current development situation remains controversial. We apply the World Induced Technical Change Hybrid (WITCH) model to explore the heterogeneity and synergy of different carbon pricing policies, and the results indicate that it will be challenging to achieve carbon neutrality before 2060. The study find that the combined policy —a mix of carbon tax and carbon market policies — has the optimal emission reduction effect but comes with the highest economic cost, proving to be unsuitable in the long run. The carbon tax policy is an important transitional means to assist in emission reduction, which can serve as an important supplement to carbon market policy and be phased out after the market mechanism matures.

Internet data centers participating in electricity network transition considering carbon-oriented demand response

With the advent of the information era and the advance of the Internet, the electricity demand of Internet data centers (IDCs) sees rapid growth worldwide. The demand response of the IDCs is a potential resource to realize load management in smart grids. In this paper, we investigate the impact of the demand response of IDCs on the electricity network transition roadmap under carbon pricing policies. Different from other types of loads, IDCs can offer both temporal and spatial load regulation potentials. With their unique demand response characteristics, IDCs can help to smooth the output of renewable energy in the energy transition process. To this end, a two-stage energy transition framework is proposed. The proposed framework work reveals the interaction between the transmission expansion planning and the carbon response of IDCs. In the first stage, a transmission network expansion model, considering the early retirement of the coal-fired power plants (CFPPs), is proposed. The utilities are compelled to prioritize carbon-constrained infrastructure augmentation in their capital programs. In the second stage, the carbon response of the IDCs is modeled. The adjusted carbon emission flow (CEF) model is proposed to track the carbon footprint of IDCs. The operation and server expansion strategies of IDCs are optimized. The IDCs' self-elasticity to the carbon price and the cross-elasticity to the electricity price is formulated to better understand the underlying driver of carbon emissions in electricity markets. With the proposed model, the operation and expansion strategies of IDC can respond to the carbon price signals actively. The proposed method is verified on the IEEE 30-bus system. The simulation results show that the proposed method can save $0.518 billion annually. Furthermore, the carbon response of the IDCs can help the network realize energy transition smoothly and reduce the total carbon emission.

How carbon trading policy should be integrated with carbon tax policy-laboratory evidence from a model of the current state of carbon pricing policy in China.

China is planning to introduce carbon tax policy to control the carbon emissions of the country better and achieve the "3060 goals", but there is still widespread discussion about how to introduce it and how to combine it with cap and trade. China has already established a national carbon emission trading market; however, there is also disagreement on whether to impose the carbon tax on companies and projects that have been included in scope of cap and trade. This paper adopts the research method of experimental economics to study the effect on social economy and social emission reduction under cap and trade, carbon tax, and carbon tax-carbon trading policies, and analyzes average prices of carbon market under cap and trade and carbon tax-carbon trading policies. The study finds that under the carbon tax-carbon trading policy, carbon emissions cannot be reduced significantly; but the profits of manufacturers will be reduced significantly; meanwhile, this reduction effect is even more severe for high consumption manufacturers; and it will be resulting in a lower average carbon market price under the carbon tax-carbon trading policies than under the cap and trade policy. This paper will provide theoretical suggestions for introducing carbon tax policy into China in the future and make policy recommendations for the better development of China's carbon market.

Carbon pricing or non-pricing for developing countries? A dual-track strategy for decarbonization in China

ABSTRACT Unlike the decarbonization trajectories adopted by developed countries, some research suggests that non-pricing policies should be prioritized over pricing policies to mitigate carbon emissions in developing economies. This paper enriches the current literature on carbon pricing by empirically linking China’s carbon pricing and non-pricing policies, using a difference-in-differences approach. The results indicate the effectiveness of the carbon pricing strategy. Furthermore, by introducing an interaction effect model, we find that a higher carbon price will significantly increase the carbon emission abatement effects. In conclusion, the findings highlight the necessity of carbon pricing instruments for decarbonization in developing countries.

Will carbon trading reduce spatial inequality? A spatial analysis of 200 cities in China

The rising concentration of carbon in the atmosphere leads to increasing climate change, and it has become a worldwide consensus to reduce emissions. Considering the degree of economic development and industrial structure of different regions and the vast differences in the spatial distribution of clean energy reserves, it is essential to develop localized emission reduction programs. This study investigates the changes in city GDP after implementing carbon pricing policies. The results show that the carbon pricing policy could effectively reduce inequalities between “rich” and “poor” regions. The Moran index before and after the implementation of the policy decreases from 0.416 to 0.401. We also found spatial clustering patterns of carbon emissions, with the main drivers of carbon emissions differing significantly between developed and developing cities, resource-based and industrial cities, and southern and northern cities in China. The most crucial driver of carbon emissions is still the demand for economic development, which can explain more than 30% of carbon emissions. This study focuses on the impact of carbon market & carbon pricing on poverty alleviation and carbon reduction, makes up for the lack of “spatial justice” in the existing studies and provides a feasible carbon reduction plan for different cities.

Exploring the Attitudes of CFOs Towards Carbon Tax Policy

ABSTRACT While climate change is a serious concern for firms and the society, scepticism remains an obstacle in the implementation of an effective emission-reducing carbon pricing policy in many countries. The support for carbon tax as a climate policy can be influenced by interest groups that hold significant power or bear substantial costs. This study draws on the attitude–behaviour–context (ABC) framework and a survey of chief financial officers (CFOs) in Canada and the United States to explore the attitudinal orientations of CFOs towards the environment, and how these attitudes relate to support for carbon tax as a climate policy. Our study identifies four value factors (altruism, egoism, traditionalism and self-transcendence) and two belief factors (environmentalism and anti-regulation) as the attitudinal orientations of CFOs. The results of applying a partial least squares structural equation modelling (PLS-SEM), including mediation and moderated mediation models, show that certain aspects of these values and beliefs relate to support for carbon tax. The results suggest that CFOs largely support carbon tax, and thus refute the findings in prior studies that accountants are unsupportive stakeholders. The study also highlights the roles that CFOs can play, arguing that their involvement may improve consistency and accuracy in carbon accounting.

Carbon Pricing and its Monitoring System as a State Revenue

This study aims to examine the implementation of carbon pricing collection in Indonesia. This study also provides a review of the potentials for excise revenue, income tax (PPh), and value-added tax (VAT) from carbon emissions and an effort to build integrated supervision among stakeholders. This research uses descriptive qualitative method. The research data were obtained from a review of documents and regulations regarding carbon emissions. The research was conducted by comparing the best practices in the worldwide with the Indonesia government policy on carbon taxes. The results show a great potential for the country to apply carbon pricing collection through carbon taxes, carbon permits, or cap-and-trade (emission trading system). On the other hand, the collection of a tax on carbon or cap-and-trade schemes requires complex oversight. Therefore, a synergy among institutions is needed, such as the Directorate General of Taxes (DJP), the Financial Services Authority (OJK), and the Ministry of Environment and Forestry (KLHK). The digitization of the system and the establishment of a data warehouse are the main strategies to support the performance of the task force involving the three institutions in implementing joint audits. The recommendation from this research is that Indonesia should immediately implement the carbon pricing policy and form joint audits in monitoring its implementation. This research encourages further research on carbon pricing, carbon tax, PPh and VAT, as well as research on the economic impact of the policy at each level of carbon emission rates.