Carbon Tax Rate Research Articles

Optimizing environmental regulation policies for digital transformation in energy enterprises in China: An evolutionary game theory approach

In response to the global consensus on achieving carbon reduction, China has introduced a series of policies aimed at accelerating the digital transformation of energy enterprises. However, these policies have revealed shortcomings such as deficiency in regulation methods and insufficient integration of regulation with technologies. This study applies evolutionary game theory (EGT) to evaluate the impacts of different environmental regulatory policies on the digital transformation and verifies the effectiveness of the theory in policy optimization. Utilizing modified real-world data, the study quantitatively examines the effects of alterations in various parameter combinations on players' strategic choices. The results indicate that: (1) increasing the regulatory intensity above 0.8, the carbon tax rate and penalties can promote the digital transformation, stimulating the low-carbon development in energy sector; (2) an interesting finding is that tax incentives such as carbon tax refund ratio can exacerbate enterprises’ reliance on government compensation, thereby slowing down their transition process; (3) this study highlights the optimal service provision intensity for technological service providers (TSP) is 0.9, which can expedite system evolution towards the ideal state and foster the construction of a favorable digital regulatory environment. The study provides valuable references for optimizing regulatory policies and promoting digital transformation to realize the decarbonization goal.

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.

Does the Carbon Tax in South Africa Encourage the Adoption of Wind Energy in the Country’s Power Sector?

This research aims to evaluate whether South Africa’s carbon tax rate incentivises the adoption of wind energy within the nation’s power sector. By employing qualitative analysis, the study examines whether South Africa’s carbon tax rate is suitable for promoting wind energy uptake in the power sector. Additionally, it identifies the level of carbon pricing required to stimulate investments in wind energy in South Africa’s power sector using net present value (NPV) simulations. The research finds the South African carbon tax to be too low to incentivise the adoption of wind energy. It emphasises that in order to stimulate decarbonisation investments, carbon prices must be higher than abatement costs. The NPV simulation indicates that increasing the carbon price by ZAR 869.50 per tonne of CO2 would result in a positive NPV, thereby encouraging investment in wind energy in South Africa’s power sector. Therefore, the study advocates for higher carbon prices to drive wind energy investments. This research contributes to tax policy scholarship by proposing a carbon pricing model for the adoption of wind energy in South Africa’s power sector. Ultimately, decarbonising the power sector, a major source of greenhouse gas emissions (GHGs), will strengthen South Africa’s efforts in reducing carbon emissions.

Evolutionary game analysis of carbon emission reduction in transportation infrastructure construction under dual regulation

Under the dual regulation of government intervention and environmental constraints, user demand, low-carbon awareness, and the willingness of construction enterprise to reduce carbon emissions are crucial to the realization of low-carbon transportation infrastructure construction. Basing on prospect theory, this paper constructs an evolutionary game model for the government, construction enterprise, and user, explores the stabilization of the three-game players' strategy choices, and discusses the influence of key parameters on the behavior evolution of relevant players through simulation analysis. The results indicate that: the regulatory cost when the government adopts incentives or no incentives is an important factor affecting the strategy choice. The enhancement of incentives by the government can promote the construction of enterprise and the selection of low-carbon transportation infrastructure by user. However, when the benefit of government credibility outweighs the incremental cost of household subsidies, carbon subsidies, and regulation, the government changes its strategy and no longer adopts encouraging strategy. Improving benefits of build low-carbon transportation infrastructure reducing incremental costs, setting a ladder carbon tax rate, increasing carbon tax rate for traditional construction, and decreasing for low-carbon construction is an effective approach to stimulate enterprise to construct low-carbon transportation infrastructure. The user's choice of low-carbon transportation infrastructure strategy is positively correlated with the subsidy received and is less affected by environmental benefits. And the construction enterprise's strategy choice hasn’t been influenced by user, which is related to the public service characteristics of transportation infrastructure.

Green Technology Innovation Guiding Policies under the Synergy of Government and Financial Institutions

Guiding enterprises towards green technology innovation (GTI) is a pivotal strategy for mitigating pollution and energy wastage, thereby facilitating the transition towards a green and low-carbon economy. In order to solve the single irrationality of the existing guidance policy and improve its implementation effect, parameters of environmental regulation and green credit policy are hereby introduced to construct a tripartite evolutionary game model of the government, financial institutions, and enterprises. The evolutionary stability of the government and financial institutions in guiding enterprises' GTI is analyzed. Simulation analysis method is used to visualize the evolution path of the game system under different policy options. The study results show that increasing interest rate subsidies can promote the financial institutions and the government to formulate GTI guidance policies. Besides, there is a significant synergistic effect between interest rate subsidies and green credits, which can efficiently foster GTI within enterprises and decrease their innovation costs. Building on this foundation, further increasing the carbon tax rate can lead to a reduction in government subsidy expenditures, improve the evolution rate of the ideal strategy, and expedite the realization of a green, low-carbon transformation.

Carbon pricing policies and renewable energy development: Analysis based on cross-country panel data

While studies have theoretically discussed the impact of carbon pricing on renewable energy, the practical implementation and effectiveness of these policies remain uncertain. This study empirically examines the role of carbon emissions trading and carbon tax in global renewable energy development using panel data from 196 countries and regions and employing the staggered difference-in-differences (DID) model and Bacon decomposition method. The results suggest that: (1) From the perspective of policy shocks, carbon trading has increased non-hydro renewable electricity generation by 73.32%, while carbon tax has increased it by 31.79%. This indicates that the overall impact of carbon trading on renewable energy is greater than that of carbon tax. However, the elasticity coefficients of renewable energy to carbon trading prices and carbon tax rates are 0.1801 and 0.1845, respectively, suggesting a slightly greater marginal effect of carbon tax on renewable energy compared to carbon trading. (2) Both carbon tax and carbon trading have mitigated the growth of fossil electricity and encouraged public investment in renewable energy, thereby fostering its development. (3) The influence of carbon pricing on renewable energy varies by income level; notably, the implementation of these policies in high-income countries has diminished their promotional effect on renewable energy. (4) The contribution of technological innovation to renewable energy development is smaller than that of policies including carbon trading and carbon tax, indicating that renewable energy development during the sample period was predominantly driven by policy measures. The findings indicate that the application of carbon pricing policies should be further promoted to accelerate the energy mix transition.

Carbon tax to phase out coal as propylene feedstock and control upstream methane emissions in China: Based on dynamic radiative forcing

Carbon tax is a policy instrument that facilitate the phase-out of coal as a chemical feedstock and help China achieve an early carbon peak. However, the policy design is challenged by the complex dynamics of global warming potentials (GWP) from upstream methane emissions, which have a short atmospheric lifetime but a high climate impact. In this study, we compared the life-cycle GWP of two propylene production routes in China: Coal-to-Olefin (CTO) and Propane Dehydrogenation (PDH). We also conducted a cost-profit analysis that incorporates the carbon tax, considering uncertainties in the dynamic radiative forcing of methane. We derived a range of optimal carbon tax rates that can enhance the economic competitiveness of low-carbon propylene routes PDH and discourage the expansion of coal-fed CTO propylene routes. Results show that, for the propylene sector in China, the carbon tax rate should be between 86 and 600 Chinese Yuan (CNY) or 12–84 US dollars (USD) per ton of carbon dioxide equivalent (CO2e), which corresponds to 1–10% of the typical propylene price in the Chinese market. Our study provides spatiotemporal insights into the carbon tax for China's propylene sector to decarbonize and control upstream methane emissions. Since propylene is one of the key raw materials for chemical (e.g., plastic) productions, our analysis contributes to the climate benefits of global chemical trade.

Cooperation of firms’ environmental innovation in a supply chain under government regulation

As climate pollution becomes more severe, there is a growing interest in reducing emissions across all industries. Motivated by the emerging popularity of inter-firm cooperation to reduce carbon emissions in the supply chain, this paper investigates the effect of the firms’ environmental innovation cooperation under government regulation. Specifically, we consider a supply chain with a manufacturer selling products through a retailer, where both firms have asymmetrical environmental innovation efficiencies. Based on whether to cooperate in environmental innovation, the manufacturer and retailer invest in environmental innovation separately or simultaneously. The findings suggest that corporate collaboration, especially environmental innovation cartels, can promote environmental innovation, reducing product emission intensity, further driving down wholesale price, and increasing sales volume. Notably, the more closely firms cooperate, the more beneficial it is for the entire supply chain and consumers, but not necessarily for the manufacturer and retailer simultaneously. In the case of environmental innovation cartels, a two-part tariff contract can coordinate the supply chain, increasing the manufacturer’s and retailer’s profits. Furthermore, cooperation is detrimental to the environment when the carbon tax rate is relatively high. The government should set the intensity of regulation reasonably, considering the environmental innovation mode of firms. As the emission quota grows, carbon tax regulation is more likely to result in fewer emissions and is favored by policymakers. We also extend the model to multiple situations to check the robustness of the results and find our main results remain valid.

Carbon Pricing Policy to Support Net Zero Emission: A Comparative Study of Indonesia, Finland and Sweden

The Nationally Determined Contribution (NDC) of Indonesia in the Paris Agreement targeted emission reductions of 29% on its own and 41% with international cooperation in 2030, followed by Net Zero Emissions (NZE) in 2060. To achieve NZE, Indonesia enacted a carbon tax policy on April 1, 2022. The 2022–2024 carbon tax is limited to Steam Power Plants and will be imposed on other sectors by 2030. This research examines the ratio legis of carbon cost policies in Indonesia and compares the core of carbon tax policies in Indonesia with Sweden and Finland. Indonesia is starting to implement a Carbon Pricing policy under the ‘Cap-and-Tax’ scheme. The Cap scheme will be a means to force changes in the business culture in Indonesia, so the companies will pay attention to and reduce the carbon emission produced to avoid paying penalties for carbon exceeding the limits. Meanwhile, the Carbon Tax will provide economic resources to Indonesia to develop environmentally friendly technologies, fund research on renewable energy, and provide incentives for environmentally friendly businesses during the transition process to a carbon culture in Indonesia. Referring to the results of the comparison of carbon pricing policies in Finland and Sweden, Indonesia can gradually increase the cost of carbon taxes starting from Rp30,000/US$2 per ton CO2 equivalent to US$10 per ton CO2 equivalent. Meanwhile, for the imposition of high carbon tax rates, such as in Finland (US$73.02 per ton CO2 equivalent) and Sweden (US$137 per ton CO2 equivalent), Indonesia must carry out tax reforms, so the applied carbon tax is able to reduce carbon emissions without causing adverse impacts for the Indonesian economy.

Reducing carbon emissions in prefabricated buildings supply chains: a focus on component manufacturing processes.

The construction sector accounts for 23% of emissions from global economic activity, with China responsible for nearly 41%. Although China has vigorously promoted the development of prefabricated buildings (PBS) in pursuit of cleaner production, the carbon emissions from prefabricated component factories (PCF) should not be underestimated. So, the focus of this research was on how to promote the decarbonization of PCF. Based on the carbon trading market mechanism, the carbon emissions trading tax and revenue tax collection, the authors established a differential game model consisting of the local government and the PCF, studied the equilibrium solutions under different decision models, and analyzed the roles of the two tax systems, carbon trading revenue, and market preferences. The results are as follows: (1) The PCF's low-carbon technology (LCT) innovation efforts can be directly affected by the carbon price, component price, and tax rate and indirectly affected by influencing the local government's efforts. Besides, the local government and the PCF strategies can be changed through the central government's regulation of carbon prices and tax rates. (2) PCF should set reasonable prices for components, improving economic efficiency and the LCT stocks. (3) Cost-sharing contracts can encourage PCF to increase their LCT innovation, which is conducive to increasing the optimal benefits of the PCF. (4) The local government cannot be motivated by cost-sharing contracts. They can increase their optimal benefits only if the cost-sharing coefficient is below a threshold or if the environmental benefits from low-carbon production are above a specific value.

Collaborative Scheduling Optimization of Container Port Berths and Cranes under Low-Carbon Environment

Motivated by the need for a green and low-carbon economy, we explore the co-scheduling optimization of berths and cranes. Our aim is to balance the carbon tax and operating costs of ports under uncertain conditions, proposing an innovative nonlinear mixed-integer programming formulation. To address this optimization challenge, we have developed an enhanced version of the adaptive spiral flying dung beetle algorithm (ASFDBO). In order to evaluate the performance of the ASFDBO algorithm, we performed a benchmark function test and a convergence analysis with other recognized metaheuristics. In addition, we verified the practical applicability of the ASFDBO algorithm in different test scenarios. Through numerical experiments, we analyze the feasibility and effectiveness of the algorithm’s scheduling solutions and improvement strategies. Results indicate that our collaborative scheduling optimization, which considers both carbon and production costs, achieves feasible solutions and reduces carbon expenses. Finally, we investigate the impact of different carbon tax rates on the joint scheduling optimization of berths and quay cranes, and the results show that a reasonable carbon tax policy can effectively reduce the carbon emissions of ports.

Evaluation of a carbon tax in Costa Rica linking a demand system focused on energy goods and an input-output model

This study evaluates the impact of a carbon tax on CO2 emissions in Costa Rica. For the above, a demand system is estimated using data from a household expenditure survey, which allows for obtaining the elasticities of demand for various groups of goods focused on energy. Then, the environmental extension of the Leontief price model is implemented to determine the change in prices caused by different carbon tax rates (25, 50, 75, and 100 USD/ton CO2). Subsequently, both models are linked to obtain the variations in production and sectoral emissions. In addition, a Monte Carlo simulation is carried out since the estimated price elasticities have a standard deviation associated with them. The results suggest that carbon taxes mainly affect transportation, while the rest of the sectors have slight impacts in all simulated scenarios. For example, the drop in total CO2 emissions is explained between 89.6% and 91.3% by the decrease in emissions in the passenger transport and other transport sectors with a 95% confidence interval. The previous is explained by the composition of Costa Rica's energy matrix, which has a very high share of renewable energies. Finally, some climate policy options are suggested to contribute to this country's carbon neutrality.

Evaluation of Technological Configurations of Residential Energy Systems Considering Bidirectional Power Supply by Vehicles in Japan

To reduce CO2 emissions in the residential and transportation sectors, distributed energy technologies, such as photovoltaic power generation (PV), stationary storage batteries (SBs), battery electric vehicles (BEVs), and vehicle-to-home (V2H) systems, are expected to be introduced. The objective of this study was to analyze the impact of the installed capacity of PV and SB, the type of vehicle, and their combination on the economic and environmental performance of the total energy consumption of residences and vehicles. Thus, this study developed a model to optimize the technological configuration of residential energy systems, including various vehicle types and driving patterns. The simulation results showed that it is more economically and environmentally efficient to install a BEV and a V2H system in households with longer parking times at the residence and to install an SB in addition to these technologies in households with shorter parking times at the residence. Furthermore, comparing a gasoline vehicle and an SB, the most economical combination, with a BEV and a V2H system and with a BEV, a V2H system, and an SB, estimated the carbon tax rate necessary for cost equivalence. The result indicated that the carbon tax rate needs to be increased from its current level.

Digitalization and carbon emission reduction technology R&D in a Stackelberg model

ABSTRACT This paper constructs a four-stage sequential game model considering digitalization and carbon emission reduction decisions, examines the effects of digitalization on firms’ emission reduction and carbon emission reduction technology R&D, and analyzes the optimal digitalization level. The results show that emissions reduction is correlated with the digitalization level, the cost-reduction effects, and the carbon tax rate; technology R&D benefits from digitalization support; there exists an optimal digitalization level that is nonlinearly affected by the carbon tax rate, and the digitalization level that satisfies the maximization of social welfare is higher, so the government should provide digitalization incentives.

Production Decision Model for the Cement Industry in Pursuit of Carbon Neutrality: Analysis of the Impact of Carbon Tax and Carbon Credit Costs

One of the solutions to achieve the goal of net-zero emissions by 2050 is to try to reduce the carbon emission by using the carbon tax or carbon credit (carbon right). This paper examines the impact of carbon taxes and carbon credit costs on the cement industry, focusing on ESG indicators and corporate profits. Utilizing Activity-Based Costing and the Theory of Constraints, a production decision model is developed and analyzed using mathematical programming. The paper categorizes carbon tax models into continuous and discontinuous progressive tax rates, taking into account potential government policies like emission tax exemptions and carbon trading. It finds that reducing emission caps is more effective than increasing carbon tax rates in curbing emissions. These insights can assist governments in policy formulation and provide a reference framework for establishing carbon tax systems.

Reducing Fossil Fuel Dependence and Exploring Just Energy Transition Pathways in Indonesia Using OSeMOSYS (Open-Source Energy Modelling System)

Indonesia’s commitment to the Paris Agreement and its Nationally Determined Contribution (NDC) is not adequately reflected in the significant CO2 emissions from fossil-fuel-intensive energy sectors, despite the enormous potential of renewable energy sources in the country. The ongoing coal regime has led to electricity oversupply and air pollution problems. Despite the huge challenges for Indonesia, a just energy transition away from fossil fuel is crucial. This study aims to explore the ideal energy mix and key emission reduction pathway in Indonesia in achieving a just energy transition using the least-cost optimisation energy modelling tool OSeMOSYS. Six scenarios are modelled over the period 2015–2050 including coal phase-out, NDC, the Just Energy Transition Partnership (JETP), and carbon tax implementation. The results highlight that solar power, geothermal power, and hydropower are the alternatives for coal decommissioning. Despite the large-scale investment in renewable energy under the NDC and JETP scenarios, emissions could be reduced by 55% and 52%, respectively, by 2050. Moreover, Indonesia’s current carbon tax rate will not lead to a significant emission reduction. Three recommended policies include (1) accelerating CFPP retirement; (2) imposing an aggressive carbon tax rate; (3) prioritising investment in solar technologies.

Big Data Simulation Analysis of the Impact of China’s Carbon Tax Levy on Carbon Emission Behavior under the Background of “Dual Carbon”

Abstract This study focuses on the impact of China’s carbon tax on carbon emission behavior under the background of “double carbon”, using big data simulation analysis. The study utilizes the DICE model, combined with general equilibrium theory, to conduct in-depth theoretical analysis and numerical simulation of the carbon tax policy. It is found that the optimal carbon tax rate should be flexibly adjusted in combination with social and economic development and technological progress, and the optimal tax rate gradually rises from RMB 2.83/tonne of carbon dioxide to RMB 17.62/tonne from 1997 to 2023. Simulation results show that increasing the carbon tax rate can effectively promote the low-carbon emission reduction behavior of enterprises and thus achieve the emission reduction target. Under the fixed carbon tax policy, a 50% tax rate can significantly improve environmental quality and economic output. In contrast, steady-state values of output and carbon emissions decrease with the increase of tax rates. At the same time, the combination of carbon trading and carbon tax can more effectively incentivize enterprises to reduce carbon emissions. The results of the study show that a flexible and reasonable carbon tax policy can significantly affect carbon emission behavior, which is of great significance for realizing China’s “double carbon” goal.

A hybrid trade-old-for-new and trade-old-for-remanufactured supply chain with carbon tax

Facing serious environmental problems, governments and manufacturers are taking action to reduce carbon emissions. Among these endeavors, carbon tax policy are widely adopted by governments, trade-old-for-new (TON) and trade-old-for- remanufactured (TOR) are offered by manufacturers and subsidized by governments. To explore the effects of remanufacturer competition and carbon tax on the manufacturer’s TON and TOR decisions and the environment, we formulate three profit maximization models and present some theoretical and numerical analyses. The results show that, under the remanufacturer competition and carbon tax, the manufacturer’s optimal price and production decisions mainly depend on consumer willingness and carbon tax rate. A higher consumer willingness to manufacturer’s remanufactured products will decrease the demand for the manufacturer’s TON, but it always increases the demand foe the manufacturer’s TOR. A higher consumer willingness to remanufacturer’s products will not affect the demand for the manufacturer’s TON; however, it will reduce the demand for manufacturer’s TOR. In addition, we find that a higher carbon tax rate always reduces total carbon emission reduction, and it may increase the manufacturer’s profit due to the increase in TOR demand.

Tantangan Pajak Karbon Sebagai Alternatif Kebijakan Transisi Energi Bersih di Indonesia Studi Kasus Industri Otomotif

Climate is the average weather where weather is the state of the atmosphere at a given point in time. Climate is defined as the average size and variability of relevant magnitudes of certain variables. Concrete activities in climate change mitigation are reducing and/or preventing greenhouse gas emissions released as a result of human activities. Various activities can be classified as climate change mitigation, including switching to public modes of transportation, using clean renewable energy, Carbon taxes are economically significant for reducing carbon emissions, Carbon Pricing can be used as a tool to determine the external cost of greenhouse gas (GHG) emissions. This study uses signaling theory which was first introduced by Spence in his research entitled job market signaling. The method used by researchers in qualitative descriptive writing with a literature review, the results of the study concluded that France, Sweden, Japan have succeeded in implementing taxes. Even though at the beginning of its implementation there were many objections from various parties and now it has succeeded in having a positive impact on the country's economy, while Indonesia will start implementing a carbon tax from April 2022 on the Coal-Fired Power Plant sector, the carbon tax rate applied is the same as the carbon price. on the carbon market but not less than IDR 30 per kilogram of CO? equivalent.

Manufacturer’s Green Financing and CER Decisions under the Carbon Tax Policy and Capital Constraints

This study constructs a two-echelon low-carbon supply chain consisting of a single manufacturer and a retailer. The manufacturer’s initial capital is zero. The study analyzes three financing modes of the manufacturer by using the Stackelberg game model: external financing (the EF mode), internal financing (the IF mode), and trade credit financing (the TC mode). We found that the IF mode is superior to the EF mode while inferior to the TC mode regarding carbon emission reduction (CER), market demand, and the manufacturer’s profit. Additionally, the IF mode is superior to the EF mode regarding the retailer and supply chain’s profits and special to the TC mode only when the loan and deposit interest rate meet the specific conditions. The best financing mode for the manufacturer is the TC mode, but he needs to give some compensation to the retailer in order to make the retailer cooperate with him. The impact of carbon tax rate changes on the equilibrium solutions in the three financing modes is not only related to the change range of the carbon tax rate itself but also closely related to the initial carbon emissions. A high carbon tax rate can help stimulate the cleaner manufacturer to reduce carbon emissions, but a moderate carbon tax rate is more applicable to the polluting manufacturer. A numerical example is given to demonstrate some of the conclusions. Finally, the study provides managerial insights based on the analytical results.