Carbon Tax Policy Research Articles

Would carbon tax policy promote real estate prices?

Real estate plays a pivotal role in carbon emissions. Carbon tax policy is a crucial measure for mitigating enterprises' carbon emissions. However, imposing a carbon tax on productive enterprises in the real estate industry to reduce emissions may increase their production costs, which could easily be passed on to buyers, thus inflating real estate prices and impeding policy effectiveness. To examine the impact and negative consequences of carbon tax policy applied to the real estate industry, we develop a dynamic stochastic general equilibrium model encompassing building materials manufacturers, real estate firms, and the environmental regulatory government. Findings indicate that implementing the carbon tax policy significantly reduces carbon emissions in the real estate industry. However, the existence of a price transmission mechanism makes carbon tax policies susceptible to driving up real estate prices. Further welfare analysis shows that increasing carbon tax rates will result in social welfare losses, allowing the government to modify and refine its policy objectives.

The impact of renewable and non-renewable energy consumption on aggregate output in Pakistan: robust evidence from the RALS cointegration test.

Over the past three decades, Pakistan's energy consumption has surged due to industrialization, population growth, and development activities. To meet the escalating energy demands, the country has primarily relied on thermal power projects, which are financially burdensome and environmentally detrimental, compared to hydropower projects. This reliance exposes Pakistan to global oil price shocks and environmental degradation. To address this dilemma, this empirical research investigates the impact of both non-energy factors (labour and capital) and energy-specific factors (renewable and non-renewable) on Pakistan's aggregate output, using annual time-series data from 1980 to 2021. The analysis employs the newly established Residual Augmented Least Square (RALS) cointegration test and the Autoregressive Distributed Lag (ARDL) methodology to estimate the long-term cointegrating relationship among the examined variables. The empirical findings demonstrate that both non-energy and energy-specific factors positively and significantly influence Pakistan's long-term aggregate output. However, petroleum consumption exerts a positive but insignificant influence on Pakistan's long-term aggregate output. The study recommends diversifying the energy supply mix to include more hydroelectricity, non-hydroelectric renewables (mainly solar and wind), and natural gas. Specifically, transitioning from imported, expensive, and more greenhouse gas (GHG)-generating petroleum products to domestically produced natural gas could potentially reduce Pakistan's trade deficit and its vulnerability to global oil price shocks. Besides the economic benefits, shifting from non-renewable energy sources (specifically oil) to renewable energy would enhance Pakistan's image and increase its geopolitical influence over neighboring countries. Additionally, the study emphasizes the need to encourage private sector participation in renewable energy projects and suggests implementing effective carbon tax policies to mitigate CO2 emissions and foster economic growth.

Supply chain carbon abatement under different power structures: impact of consumers’ low-carbon preference and carbon tax policy

Supply chain carbon abatement under different power structures: impact of consumers’ low-carbon preference and carbon tax policy

Optimization of shipping freight forwarding services considering consumer rebates under the impact of carbon tax policy

Maritime carbon emissions, contributing to approximately 2.89% of global anthropogenic CO2 emissions, have prompted governments to actively promote a low-carbon shift in the freight forwarding sector. The effect of carbon tax implementation on guiding freight forwarders towards offering more eco-friendly freight forwarding services and facilitating a low-carbon transition remains unclear. This study categorizes freight forwarding services models based on delivery speed, ranging from fast to slow, and environmental friendliness, from low to high. It examines scenarios involving a singular carbon tax and consumer rebates, establishing a freight forwarder model without carbon tax constraints (N-T model), a singular carbon tax model for freight forwarders (C-T model), and a combined carbon tax-consumer rebate model (C-C model). The findings suggest that carbon tax pressures from regulatory bodies ultimately affect consumers; thus, under tax cost pressures, freight forwarders must adapt their shipping strategies. A shift towards more eco-friendly freight forwarding services occurs if the rate of demand growth is less than the increase in fixed delivery costs, and an optimal tax rate can drive this shift. Conversely, when the perceived rebate difference between any two services surpasses a certain threshold, eco-friendly freight forwarding services are consistently favored. In the absence of such conditions, a well-designed carbon tax policy is essential to steer freight forwarders toward reducing carbon emissions.

Sustainable inventory, pricing, and marketing strategies for imperfect quality perishable items with inspection errors and advertisement-, expiration date- and price-dependent demand under carbon emissions policies

The demand for perishable products is affected by freshness levels, advertising efforts and selling prices, among other factors. By virtue of being consumed mostly by humans, quality control is also an important factor in perishable production systems. Moreover, inventory management related operations in such production systems release sizeable quantities of carbon emissions that are often regulated by carbon policies. To study the interactions of all these attributes in the context of a perishable inventory system, this paper proposes four sustainable inventory models for a perishable product with imperfect quality, inspection errors and whose demand depends on the advertising frequency, expiration date and selling price. The emissions released are assumed to be governed by carbon tax and carbon cap policies. Two of the models are developed under the assumption that the quality inspection process is 100% effective while the other two models consider the possibility of committing inspection errors, and additionally, for each pair of models, one is developed under a carbon tax policy and the other under a carbon cap policy. All the models are aimed at jointly optimising the perishable product’s lot-size, advertising frequency and selling price. The numerical results show that the presence of inspection errors leads to 28% and 23% lower profits under carbon tax and cap policies, respectively. Moreover, profit can be maximised by either stocking perishable products with longer shelf lives or targeting customers that engage with advertising mediums and those that are not price-conscious, while emissions can be minimised via the enforcement of carbon policies.

Options for environmental regulation policy under China's carbon peaking target: Energy supply policy or carbon tax policy?

China plans to achieve the carbon peaking target by 2030 and will maybe implement a series of environmental regulation policies, primarily including energy supply policy (such as coal consumption constraint and non-fossil energy development) and carbon tax policy. This paper simulates these policies using a computable general equilibrium model. The simulation results indicate that carbon tax policy has a finite impact on the economy, the emissions reduction effect is also limited and carbon tax policy alone is insufficient to achieve China's 2030 carbon peaking target. The coal consumption constraint policy has a good emissions reduction effect, but is not conducive to economic growth. The non-fossil energy development policy can increase energy supply and promote economic growth, but the emissions reduction effect is inadequate. In general, the simultaneous implementation of the coal consumption constraint and non-fossil energy development policies could not only achieve the carbon peaking goal, but also narrow the energy gap and reduce pressure on economic growth. However, it is notable that if carbon tax policy and energy supply policy are implemented simultaneously, the emissions reduction effect of carbon tax policy would be significantly reduced; therefore, it is likely that no carbon tax will be levied in China.

Sustainable broiler chicken meat production: A three-layer model for emissions reduction and traceability

The world's major issues are climate change and global warming. The broiler chicken meat production industry plays a significant role in greenhouse gas emissions, which are responsible for global warming and climate change. The world urgently needs a new emission-free, eco-friendly, and sustainable meat production system. In this research, a three-layer broiler chicken meat production supply model is developed with greenhouse gas emissions reduction and an eco-friendly meat production system. The green technology investments and carbon tax policy are implemented to reduce greenhouse gas emissions from broiler chicken farmers and processors. The optimal cycle time, green investment, and number of shipments in the proposed model are computed in the Mathematica 9.0 software flatform by using the solution-finding algorithm. The concavity of the objective function is verified through two methods: mathematically, using the Hessian matrix concavity test, and graphically, by three-dimensional plotting of the objective function. The numerical examples, optimal solution table, results discussion, sensitivity analysis, and managerial implications are presented for the broiler chicken meat-producing industry. The emission cost of the processor and farmer are minimized by 5.29% and 15%, respectively, by the implementation of green technology investments. The AITP has increased by 1.01%. This study found that greenhouse gas emissions from the broiler chicken meat-producing industry can be significantly reduced by carbon tax implementation and utilizing renewable energy resources for energy requirements.

Designing green logistics networks under carbon tax policy: Post-COVID condition

This paper proposes a fuzzy-based method for estimating demand in forward and reverse logistics networks (F&RLNs) subject to carbon pricing in the post-COVID era. We investigate the complex relationships between carbon prices, the reverse logistics network (RLN), and the ever-changing product demand by utilizing fuzzy inference systems (FIS) capabilities. The case study from Mexico confirms the effectiveness of the proposed technique. The findings demonstrate the precision and predictive power of our proposed FIS-based method and show how well it can predict the number of items in demand and the number of goods that will be returned and subject to carbon taxation in the post-COVID era. The results illustrate the significant impact that carbon pricing has on the RLN and the associated product demand. For logistics managers seeking to make informed decisions about the establishment and operation of forward and RLNs within the carbon pricing paradigm, this empirical data provides insightful information in the post-COVID era.

Assessing the Sectoral Economics Consequences of Carbon Price Using Price-Output Model Analysis

Abstract A carbon pricing policy is featured in the Twelfth Malaysia Plan as a considered measure for Malaysia to achieve its net-zero emissions goal by 2050.This study utilised price and output model analysis using Eora Multi-Region Input-Output Table 2016 (MRIO) database to assess the impact of carbon tax policy on price and output changes. The study reveals that the manufacturing sector is the most sensitive to the introduction of a carbon tax, with pronounced effects including a price escalation of 0.54% and a reduction in output of 0.81%. The ranks of sensitivity then followed by agriculture, services, mining and construction sector. the services sector presents a compelling opportunity for policymakers, offering a robust tax revenue stream while displaying lower vulnerability to the tax’s effects. This observation underscores the importance of a strategic approach in carbon tax policy, where the potential for revenue generation is balanced against the differential impacts on sectoral vulnerability. This study provides an insightful information for policymakers to develop strategic plans to ensure a smooth transition towards carbon pricing policy and foster sustainable economic development.

Research on the Inhibitory Effect of the EU’s Carbon Border Adjustment Mechanism on Carbon Leakage

Associated with more ambitious targets for reducing emissions, the European Union (EU) plans to implement the Carbon Border Adjustment Mechanism (CBAM) fully in 2026, aiming to reduce carbon leakage and competitiveness concerns by imposing tariffs on carbon-intensive imports, which is expected to significantly impact its trade partners. Existing research has focused on CBAM’s impact on macroeconomic indicators but has insufficiently addressed its effects on global and regional carbon leakage, especially in non-EU countries like China. This research offers a detailed analysis of industry-specific leakage rates and integrates both global and regional impacts by employing the dynamic recursive GTAP-E general equilibrium model to numerically simulate CBAM’s inhibitory effect on carbon leakage under different carbon tariff scenarios, while also exploring the synergistic effects of anti-leakage policies in non-EU countries. Our simulations indicate the following: (1) CBAM effectively inhibits carbon leakage, with greater inhibition observed at higher tax rates and with the expansion of covered industries. (2) Establishing China’s domestic carbon market pricing can further reduce regional carbon leakage rates. Implementing global export carbon tax policies will significantly diminish the risk of global carbon leakage. (3) The implementation of CBAM is projected to reduce China’s total exports to the EU, though this loss will be partly offset by trade diversion effects. Carbon-intensive industries are more adversely affected in the short term, while all industries except fossil fuels face inevitable long-term negative impacts.

Biorefinery superstructure optimization under carbon pricing policies using stochastic programming

The growing utilization of biomass feedstocks for climate change mitigation has led to increased research on biorefineries. Concurrently, environmental policies are evolving as crucial tools to address these global concerns. Cap-and-trade, carbon tax, and carbon cap policies have been established to reduce carbon dioxide emissions. In this work, a mathematical optimization model is developed to integrate biorefinery process design with carbon pricing policies and crediting mechanisms. A two-stage stochastic mixed integer linear programming model is proposed to account for emissions, feedstock supply, chemical demand, and pricing uncertainties. A bi-objective optimization framework is employed to consider economic and environmental metrics. The framework is a valuable tool for governments and businesses to determine pareto-optimal investment strategies under environmental policies. It is applicable for evaluating prospective chemical technologies with carbon pricing policies beyond biorefineries. The results indicate that carbon crediting mechanisms can minimize the financial penalty by up to 50% under a carbon tax policy. Implementing chemical demand constraints within a cap-and-trade policy reduces potential profits, especially when the carbon prices are high. The stochastic programming approach revealed that underestimating the expected carbon cap leads to lower expected profits. Despite the financial implications of these policies, profitable process designs are achievable.

On the acceptance of high carbon taxes in low- and middle-income countries: a conjoint survey experiment

Abstract Changing consumption patterns from growing middle-classes with consequent rising energy use and emissions in low- and middle-income countries (LMICs) present key challenges for the energy transition and climate change mitigation. Carbon taxes are an effective policy instrument to counter these developments, yet concerns about low public acceptability hinder their introduction. Here, we seek to fill a research gap and identify publicly acceptable carbon tax designs in LMICs. We provide novel evidence from three conjoint experiments with 2700 middle-class respondents in Ghana, Peru, and the Philippines. We show that overall, the majority in all three countries supports even high taxes of USD-PPP 75/tCO2 per year, irrespective of specific policy design features. The support for a very high tax rate is especially high if revenues are recycled for environmental purposes. Thus, governments in LMICs have political leeway to finance the transition to a low-carbon economy via carbon taxes. Moreover, revenue recycling for the poorest receives high support from important subgroups. These insights are crucial to achieving an effective, acceptable, and just carbon tax policy design.

Carbon tax for energy-intensive enterprises: A study on carbon emission reduction strategies

With the implementation of the carbon tax policy, the carbon emission reduction (CER) actions taken by leading enterprises in energy-intensive industries will significantly influence the CER decisions of their following firms. To delve into the boundary conditions of leading and following enterprises’ CER strategies, this paper constructs three tailored CER decision-making game models, specifically targeting leading and following enterprises in these industries. These models are designed to compare and analyze the impact of carbon tax on various CER decision modes. The study mainly derives: (1) Carbon tax is not always conducive to boosting the carbon reduction efforts of both corporations. Only when the carbon tax is smaller than a certain threshold will the carbon abatement efforts of leading and following corporations be proportional to the tax. Moreover, only when the lead firm abates its carbon emission does it contribute to the degree of carbon abatement effort. (2) The overall profitability of the supply chain (SC) is optimized when only the lead company reduces its carbon emissions. In this scenario, not only does the lead corporation’s carbon reduction efforts increase, but the lead corporation and the followers also realize a win–win profit. (3) The model with the highest carbon abatement effort is not necessarily conducive to the environment. When the unit product carbon abatement emissions of the two corporations are within a certain threshold interval, the ambient impact of carbon abatement by only the leading firm is greater than that of no abatement by both corporations. The effect on the environment is minimized when both corporations make CER.

A comparative techno-economic analysis for implementation of carbon dioxide to chemicals processes

CO2-based carbon-neutral organics production processes could potentially reshape the chemical industry. However, their feasibility and net carbon footprint rely strongly on the sources of H2. Herein, we present a comprehensive comparative techno-economic analysis of CO2-based methanol (CO2TM) and α-olefins (CO2TO) manufacturing using various feedstock supply modes: 1) the standalone mode, with external CO2 and H2 from on-site water electrolysis, 2) the integrated mode with CO2 and H2 recovered from coal-chemical plants, and 3) the integrated mode with recycled CO2 but H2 from on-site water electrolysis. The integration of CO2TM and CO2TO into coal-to-olefins (CTO) and coal-to-methanol (CTM) facilities is currently cost-effective and can reduce net CO2 emissions by 65.7% and 68.5%, resulting in a three-fold and two-fold increase in carbon efficiency, respectively. As carbon tax policies and electrolysis technologies continue to evolve, standalone CO2TM and CO2TO are projected to become more economically competitive than CTO and CTM by 2035–2045.

Comparative Analysis of Carbon Tax and Carbon Emission Trading Policies in the Context of Carbon Emission Reduction: Based on the Perspective of the Power Industry

In this paper, we focus on China's power sector to investigate ways to improve emissions reductions in the context of global warming and rising carbon emissions. This paper reviews the current state of adapted carbon emission reduction policies in China's power industry and assesses the potential effectiveness of two mechanisms, carbon taxation, and carbon trading, in achieving substantial emissions reductions. China's power sector is a major contributor to global carbon emissions, and the paper explores the balance between short-term carbon tax policies and long-term carbon trading strategies aimed at promoting an early peak in carbon emissions as well as carbon neutrality within the country. This research finds that the carbon tax can have positive impacts in the short term, whereas carbon trading exhibits higher efficiency in the long term. The paper addresses this by proposing a combination of the two mechanisms to achieve effective emissions reductions in the power industry, supporting China's goal of achieving carbon neutrality by the time of 2060. Finally, we explore the feasibility and benefits of implementing a carbon tax, highlighting its suitability for near-term implementation in the power industry. We conclude that a combination of carbon taxes and carbon trading can make a significant contribution to China's carbon peak and carbon neutrality targets.

Optimal strategies for carbon emissions policies in competitive closed-loop supply chains: A comparative analysis of carbon tax and cap-and-trade policies

This study addresses a comparative analysis of carbon emissions policies and optimal decisions in competitive closed-loop supply chains. It examines three policy scenarios: a single carbon tax, a single cap-and-trade, and a mixed policy. Competitive intensity, the degree of competition among manufacturers, and product recycling rate, a key element in closed-loop supply chains, can impact the comparative analysis of carbon policies and optimal decisions in competitive closed-loop supply chains. A supply chain system is constructed, consisting of two manufacturers and a shared retailer. We employ a decentralized decision-making approach, with a Cournot game between the manufacturers and a Stackelberg game with the retailer. The analysis considers the impacts of carbon tax, carbon trading price, and recycling rate on optimal decisions and total supply chain profit. The results demonstrate that the mixed carbon policy can yield superior economic and environmental benefits compared with the single carbon tax policy. Mixed policies are likely to be relatively less profitable in most cases than a single cap-and-trade policy. Notably, when the mixed carbon quota exceeds a certain threshold, the mixed policy surpasses the single cap-and-trade policy both economically and environmentally. This study extends previous research by examining the impacts of the recycling rate and various carbon policies on supply chain decisions and profit. The findings offer insights into optimal strategies for reducing supply chain carbon emissions, which benefits policymakers and managers. Finally, it suggests that enterprises should consider a mixed carbon policy to balance economic and environmental goals.

Scenario analysis of the Indonesia carbon tax impact on carbon emissions using system dynamics modeling and STIRPAT model

This study aims to develop a system dynamic (SD) forecasting model based on the STIRPAT model to forecast the effect of an IDR 30 per kg CO2e carbon tax on carbon emissions, estimate future carbon emissions under ten scenarios, without and with the carbon tax, and estimate the environmental Kuznets curve (EKC) to predict Indonesia’s carbon emission peak. Carbon emission drivers in this study are decomposed into several factors, namely energy structure, energy intensity, industrial structure, GDP per capita, population, and fixed-asset investment. This study included nuclear power utilization starting in 2038. The research gaps addressed by this study compared to previous research are (1) use of the ex-ante approach, (2) inclusion of nuclear power plants, (3) testing the EKC hypothesis, and (4) contribution to government policy. The simulation results show that under the carbon tax, carbon emissions can be reduced by improving renewable energy structures, adjusting industrial structures to green businesses, and emphasizing fixed asset investment more environmentally friendly. Moreover, the result approved the EKC hypothesis. It shows an inverse U-shaped curve between GDP per capita and CO2 emissions in Indonesia. Indonesia’s fastest carbon emission peak is under scenario seven and is expected in 2040. Although an IDR 30 per kg CO2e carbon tax and nuclear power will take decades to reduce carbon emissions, the carbon tax can still be a reference and has advantages to implement. This result can be a good beginning step for Indonesia, which has yet to gain experience with a carbon tax that can be implemented immediately and is helpful to decision-makers in putting into practice sensible measures to attain Indonesia’s carbon emission peaking. This research provides actionable insights internationally on carbon tax policies, nuclear energy adoption, EKC dynamics, global policy implications, and fostering international cooperation for carbon emission reductions.

Analyzing the influence of government policy on building carbon emission reduction based on differential game

With the continuous growth of low-carbon economy and people’s increasing preference for low-carbon products, the building carbon emission reduction (CER) has been highly concerned by the government. Therefore, in this study, we establish a game model through differential game to analyze the impact of government policies on building’s CER. We get: (1) Compared with the carbon tax policy, the government policy combining carbon tax and cost subsidy is more conducive to reducing carbon emissions; (2) For the three government policies, when the cost subsidy rate is lower than a fixed value, the government policy combining carbon tax and cost subsidy is the optimal strategy for building’s CER. When the cost subsidy rate is greater than a fixed value, the cost subsidy policy is the best strategy for building’s CER.

Hero or Devil: A comparison of different carbon tax policies for China

A carbon tax is a promising environmental regulation. Given its heavy industrial base and substantial reliance on coal, China is under immense pressure to transition to greener energy systems. This paper enriches Annicchiarico and Di Dio’s (2015) dynamic general equilibrium model for environmental policy analysis by integrating a Schumpeterian innovation-driven clean energy transition that endogenizes the carbon intensity of energy inputs. We analyze the environmental, energy, economic, and social impacts of various hypothetical carbon taxes – including an energy excise tax on households, an emission tax on general producers, and an energy tax on energy suppliers – across different tax rates and subsidy strategies for both short-term and long-term effects. We show that: (i) by internalizing carbon intensity, a carbon tax can achieve a “quadruple dividend”, encompassing emission reduction, energy transition, economic growth, and welfare enhancement; (ii) the optimal carbon tax strategy, integrating both an emission tax and an energy tax, directs revenue towards supporting the clean energy transition; (iii) under a single environmental regime, a composite carbon tax exceeding 250 CNY/ton is optimal, while under multiple regimes, 25 CNY/ton suffices to reduce carbon emissions per unit of output by over 90%; (iv) despite their benefits, all carbon taxes compel firms to reorganize production, inevitably risking unemployment.

Cost Allocation for Inventory Problem with Transportation Discount under Carbon Tax Policy

Cost Allocation for Inventory Problem with Transportation Discount under Carbon Tax Policy