Carbon Tax Scenarios Research Articles

The Impact of Implementing a Carbon Tax on Welfare: Case Study of Indonesia and The Other ASEAN Member Countries

Green House Gases emitted into the atmosphere over decades cause global warming now. The aim of this research is the impact of implementing the carbon tax on welfare in Indonesia. The research method used is the CGE method using GTAP-E to evaluate energy policy in the economy. GTAP-E consists of 140 countries and 57 sectors combined into forty-two regions and eight sectors. Using carbon tax scenario (simulation 1 is 1.93 USD/ton CO 2, simulation 2 is 3.72 USD/ton CO 2, and simulation 3 is 4.83 USD/ton CO 2). The results of the Indonesian equivalent variation show a negative value. The higher the carbon tax is applied, the greater the decline in welfare. This is also felt by all research countries except the Philippines, Singapore, Thailand, Oceania, OtherSEAsia, East Asia, Argentina, Japan, Poland, Portugal, and Ukraine. The variable of the regional demand, it can be seen that the carbon tax causes Indonesia's regional income to increase, and Singapore's income to decrease, while other countries experience no change in income. The primary factor return ratio also shows that the increase in the carbon tax caused a decline in the Land, Unsklab, Sklab, Capital, and Natural Resources sectors. Indonesia's GDP also shows a decrease if a higher carbon tax is implemented, but other countries have no impact on GDP. The Carbon emissions show that it decreases to Indonesia. So, the implementation of the carbon tax causes a decrease in welfare as seen from the equivalent variation, Primary Return Ratio, and GDP in Indonesia. The government must have an alternative policy if a carbon tax is implemented in Indonesia.

Environmental and economic assessment of hydrogen-powered ferries for inland transportation

This paper investigates the environmental and economic impacts of hydrogen-powered ferries in inland passenger and car transportation using Life Cycle Assessment (LCA) and Life Cycle Cost Analysis (LCCA). Three types of electrolysers and two types of fuel cells, focusing on their manufacturing locations, are compared with two Marine Diesel Oils (MDOs) with various sulphur percentages. In addition, this study utilises the Analytical Hierarchy Process (AHP) to weigh and rank the environmental impacts of all power options based on expert opinions. As a result of the combination of LCA and AHP analysis, the most environmentally friendly power option is found to be the Solid Oxide Electrolyser-Solid Oxide Fuel Cell system for the case study, while the worst option is the Proton Exchange Membrane Electrolyser- Proton Exchange Membrane Fuel Cell system. Moreover, MDOs are the most cost-effective power options in all carbon-tax scenarios.

Pricing Decisions in Construction and Demolition Waste Recycling Supply Chains under Carbon Tax Scenarios

Pricing decisions for construction and demolition waste recycling are severely hampered by consumer uncertainty in assessing the value of recycled building materials. This paper uses a construction and demolition waste (CDW) recycling utilization model that consists of a building materials manufacturer and a building materials remanufacturer and compares both the prices and the profits under different carbon tax scenarios, i.e., consumer risk-averse and risk-neutral scenarios. The main conclusions are as follows. (1) The optimal price of traditional products is always negatively correlated with consumer risk aversion. Unlike traditional products, the optimal price of recycled building materials is negatively related to the degree of consumer risk aversion in the case of a low carbon tax; the opposite conclusion is obtained in the case of a high carbon tax. (2) When the abatement cost coefficient is below the threshold and the carbon tax is low, the profits of the building materials manufacturer and remanufacturer show a U-shaped trend with consumer risk aversion; in the case of a high carbon tax, the profits of the two enterprises are positively correlated with consumer risk aversion. In addition, when the abatement cost coefficient is above the threshold, there is an interval in which the profits of the building materials manufacturer are positively correlated with consumer risk aversion in the case in which the carbon tax satisfies this interval. In all the other cases, there is a U-shaped trend in profits and consumer risk aversion levels for both the building materials manufacturer and the remanufacturer.

Analytical study of integrating downhole thermoelectric power generation with a coaxial borehole heat exchanger in geothermal wells

Geothermal power generation employing Organic Rankine Cycle (ORC) technology is a widely acknowledged and conventional approach for harnessing geothermal energy. In an innovative advancement, we propose a novel design integrating downhole thermoelectric power generation with a coaxial borehole heat exchanger. This design aims to enhance the efficiency and sustainability of geothermal energy utilization. In this innovative design, the geothermal well is divided into two distinct sections: a power generation section and a heat exchanging section, achieved through the implementation of a packer positioned from the uppermost part of the targeted zone. The process involves the injection of cold fluid downhole via an insulated pipe. Subsequently, a portion of the injected fluid is directed to flow in reverse within the casing-tubing annulus above the packer, while another portion circulates into the casing-tubing annulus below the packer before ascending through the tubing. This dual flow mechanism establishes distinct cold and hot sources for the thermoelectric generator, a key feature facilitated by this innovative design. Analytical models detailing of downhole temperature distribution for thermoelectric power have been meticulously developed. A comprehensive case study, focusing on a geothermal well with 3000 m length of power generation section and 500 m heat exchanging section, has been conducted. The results indicate that a significant generating capacity could be achieved with a higher wellhead temperature, and the payback period under different carbon tax scenarios is about 6–8 year. Furthermore, the effects of injection rate, fluid diversion ratio, and casing-tubing configuration on power performance and thermal-electricity efficiency are also discussed. This method not only enables the concurrent harvesting of geothermal energy and power generation but also operates consistently throughout the year. The results thus emphasize the viability and economic feasibility of the proposed approach.

Assessing the distributional impacts of ambitious carbon pricing in China's agricultural sector

Non-CO2 greenhouse gas emissions from the agricultural sector play an important role in the global warming process. The carbon neutrality target pledged by China accelerates the research and implementation of climate mitigation policies. This study assessed the distributional impacts of carbon pricing on the agricultural sector from a multi-regional CGE model subdividing 12 primary agricultural sectors, 15 processed food sectors and 10 groups of households. The results revealed that in an agricultural carbon tax scenario under 1.5 °C target, emission-intensive food products (red meat and dairy products) experienced rapid price increases (4.22% and 3.14%) and consumption decreases (−6.61% and − 4.30%). The poorest rural households experienced the highest losses of 2.05% in protein and 1.42% in energy due to the decline in food consumption. Regressive welfare impacts were also observed, with the loss of rural residents being 1.3 times that of urban residents. The poorest income quintile tended to suffer a larger loss due to their higher share of food expenditures and greater vulnerability to changes in food prices. Furthermore, income inequality increased under the agricultural carbon tax, and the Gini coefficient increased by 0.57% compared with the BAU scenario in 2050, especially for the northern and southwestern regions. Tax revenue recycling focusing on the poor can help to offset the negative effects by expanding their income. Overall, a carefully designed carbon policy for the agricultural sector could help reduce carbon emissions while protecting vulnerably poor people and regions.

Techno-economic comparison of ammonia production processes under various carbon tax scenarios for the economic transition from grey to blue ammonia

Ammonia synthesis is a carbon-intensive process, with significant volumes of carbon dioxide produced during the preliminary production of hydrogen from a fossil fuel feedstock. Since carbon emissions vary significantly depending on the hydrogen production method, the impact of carbon capture and storage (CCS) implementation on the overall economic performance of the ammonia synthesis process differs. Therefore, it is crucial to (1) integrate cost-effective CCS into various ammonia synthesis processes and (2) conduct a comprehensive comparison of grey and blue ammonia systems together, considering the economic costs of the carbon emissions. This study aims to investigate the economic feasibility of large-scale ammonia processes under various carbon tax scenarios and suggest carbon-efficient options for the ammonia industry. Three ammonia synthesis processes are designed that differ in their hydrogen production method – steam methane reforming (SMR), autothermal reforming (ATR), and hybrid SMR-ATR – and these three options also have grey ammonia and blue ammonia production versions. The grey ammonia production systems do not include a carbon capture procedure, while the blue ammonia systems ensure that the CO2 emissions are below 0.065 t CO2/t NH3. In the present study, both the grey and blue versions of the three ammonia production processes are subjected to techno-economic evaluation under various carbon tax scenarios. For the grey ammonia systems, economic feasibility varies depending on the carbon tax scenario under consideration. Grey ATR becomes the most cost-effective option within a carbon tax of 95 $/ton to 115 $/ton. In contrast, the economic viability of the blue ammonia systems is unaffected by the carbon tax policy environment. In particular, blue ATR exhibits 6% and 14% lower levelized cost of ammonia (LCOA) compared to the blue SMR and blue Hybrid SMR-ATR, respectively. Overall, the results indicate that, below a carbon tax threshold of 62 $/ton, the SMR process without carbon capture is economically favorable. However, for carbon tax above 62 $/ton, the ATR process with carbon capture has greater economic feasibility than other options. A minimum carbon tax of 62 $/ton is required to promote the transition to blue ammonia. These findings thus provide valuable insight into the establishment of effective carbon regulations in response to the global demand to tackle the climate crisis.

Simulating the environmental and economic effects of a carbon tax in Vietnam: a static computable general equilibrium analysis

PurposeA carbon tax has been widely discussed and implemented in developed countries to mitigate carbon emissions, but this measure is still quite new in developing countries. Recently, the ambition of Vietnam's government in mitigating emissions has been mentioned in international commitments. To achieve these targets, the government is making efforts to seek and implement mitigation measures in the country. While carbon pricing was introduced in Vietnam, there is no study simulating the effects of a carbon tax in the country. This study simulates the environmental and economic effects of a carbon tax and then proposes appropriate policies in Vietnam.Design/methodology/approachThis study investigates the impact on the Vietnamese economy within the static computable general equilibrium (CGE) framework. Compared with previous models, the proposed model in this paper is a fairly standard CGE approach that tries to picture the economic system of Vietnam. In addition, a carbon tax on output will be modeled in this framework. This carbon tax mechanism is more flexible and direct when a carbon tax is based on direct emissions by industry level and the industry's carbon intensity. The paper decomposes the Vietnamese economy into 18 different production sectors, based on the different emission levels of CO2. The CGE model makes possible to examine the impact of a carbon tax on the whole economy through all possible channels and to differentiate a separate carbon tax among different production sectors. The impact of a differentiated carbon tax is explored not only at the macroeconomic level but also at each different industrial level. Another feature of this paper is to investigate the impact of reallocation revenue from the carbon tax.FindingsThis paper has found that by designing carbon tax scenarios at different carbon prices ($1/tCO2, $5/tCO2, $10/tCO2) with different targeted industries, this study shows that higher carbon prices cause greater damage to GDP and welfare, but also better reductions in emissions. In addition, a carbon tax on the energy sectors results in milder economic and welfare damage but less emission reduction than when levying on all sectors. At the sectoral level, a carbon tax might cause sectoral restruction. Interestingly, the electricity sector is the most affected and also is the main contributor to reducing emissions in Vietnam. Finally, the study also shows that reallocation policies of new revenue from the carbon tax would reduce the economic damage caused by carbon taxes, and in many cases promote GDP and welfare. However, these policies reduce the environmentally positive impact of the carbon tax and even induce an increase in emissions in some cases.Originality/valueThis paper studies the pure impacts of a carbon tax, it also simulates the impact of several recycling policies where the increased tax revenue is incorporated. Thereby, this research supports to design and implement carbon tax policies in Vietnam. This paper also would contribute to the literature an example of the adoption of the carbon tax in a developing country, and it could be a lesson for others with similar conditions. Compared with previous models, the proposed model in this paper is a fairly standard CGE approach that tries to picture the economic system of Vietnam. In addition, a more flexible carbon tax mechanism is proposed to improve adequate coverage of emission resources.

Improved renewable energy storage, clean electrification and carbon mitigation in China: Based on a CGE Analysis

Although renewable energy (RE) has been developed technologically decades ago, urgent demand of clean electricity is subject to power storage due to intermittency of wind and solar power. This study develops a CGE model including RE generation and RE storage with induced technological change (ITC). Our study further analyzes the environmental and economic impacts of electrification and environmental policies on RE development and RE storage with ITC and the results are as follows: 1) a single carbon tax policy is not an appropriate instrument to pursue both environmental and economic gains against CO2 abatement and energy structural transition. 2) carbon tax with subsidy to RE storage is conducive to clean energy structural shift and economic growth in long term but it imposes slight negative impact on GDP in medium term. Furthermore, it cannot achieve 25% of non-fossil fuel consumption goal by 2030. 3) Single electrification will increase the electricity demand significantly, including both thermal and nonthermal power, thereby cause more carbon emission and GDP loss in short run. While LBD in RE and RE storage sector facilitated by electrification contributes to more GDP gain, carbon mitigation and non-fossil fuel consumption rate in long run compared to carbon tax and subsidy scenarios. 4) Electrification with carbon tax and subsidy to RE storage leads to greater CO2 mitigation and less subsidy to RE storage, better economic performance in CTSE compared to other scenarios, showing vital role of ITC in RE and power storage. 5) Promoting the LBD process is an efficient way to encourage RE development under electrification.

Technology portfolio assessment for near-zero emission iron and steel industry in China

China aims to peak CO2 emissions before 2030 and to achieve carbon neutrality before 2060; hence, industrial sectors in China are keen to figure out appropriate pathways to support the national target of carbon neutrality. The objective of this study is to explore near-zero emission pathways for the steel industry of China through a detailed technology assessment. The innovative technology development has been simulated using the AIM-China/steel model, developed by including material-based technologies and optimal cost analysis. Six scenarios have been given in terms of different levels of production output, emission reduction and carbon tax. Near-zero emission and carbon tax scenarios have shown that China's steel industry can achieve near-zero emission using electric furnaces and hydrogen-based direct reduction iron technologies with policy support. Based on these technologies, minimised production costs have been calculated, revealing that the steel produced by these technologies is cost-effective. Moreover, the feedstock cost can play a key role in these technology portfolios, especially the cost of scrap, iron ore and hydrogen. In addition, the feedstock supply can have strong regional effects and can subsequently impact the allocation of steelmaking in the future. Therefore, China can achieve near-zero emissions in the steel industry, and electric furnace and hydrogen-based direct reduction iron technologies are crucial to achieving them.

Thinking Beyond the Gas Tax: A Case Study Analysis of a Road User Charge System for Texas

Surface transportation funding in the U.S. is heavily reliant on fuel taxes that are becoming less effective as fuel efficiency increases and alternative fuel vehicles become more common. This report examines the benefits and challenges of using road user charges (RUCs) of various types to address this issue, before analyzing the potential revenue from a hypothetical RUC on four urban corridors within Texas. Common issues for RUCs are discussed, which include privacy, interstate coordination, and program administration. A range of possible options for RUCs are discussed, followed by an analysis of four corridors in the following counties: Bexar, Collin, Harris, and Lubbock. Data from TTI’s Urban Mobility Report on VMT were utilized along with vehicle registration data from TTI’s TRENDS model to estimate an average miles per gallon for each county based on the local fleet. Three scenarios were then developed including a revenue recovery scenario, a variable pricing scenario, and a carbon tax scenario. This report concludes with a discussion of the scenario results. Specific challenges and barriers for each scenario are discussed along with a discussion of the data sources and privacy trade-offs.

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.

Evaluation of solar photovoltaic carport canopy with electric vehicle charging potential

While sustainable mobility and decarbonization of transportation sector are among the most comprehensive solutions to the problem of climate change, electric vehicles (EV) are becoming increasingly popular as the future mode of transport. In this study, the integration of a solar carport canopy to a potential EV charging station is analyzed using various operating conditions. A detailed analysis has been provided for the carport located in southern Taiwan, Kaohsiung city, where electricity generation, emission impacts, and financial analysis of the solar EV charging station are discussed. The results of a case study showed a potential of 140 MWh/year of solar energy yield, which could provide solar electricity of more than 3000 vehicles per month with 1-h parking time, generating 94% lower total carbon dioxide emission than the electricity produced from traditional grid methods. Taken into account the impact of carbon tax implementation on driver economics, the results demonstrated the viability of such photovoltaic (PV)-based charging stations, particularly for possible higher carbon tax scenarios in the future. The presented results can be implemented on a larger scale, offering guidelines and tools for constructing solar-powered EV charging station infrastructure.

Future of Carbon Storage in the Yangtze River Basin, China under Alternative Climate and Land-Use Pathways

While the Chinese government has put a strong emphasis on combating climate change and pledged to strive for “carbon neutrality” in the 2060s, it is fundamental to assess the likely evolution of carbon storage in China’s terrestrial ecosystems. Here, we conducted a simulation study grounded by recent empirical evidence and advances in modeling techniques to project the spatiotemporal dynamics of carbon storage of the Yangtze River Basin (YRB)’s ecosystem from 2015 to 2050. Two sets of scenarios were developed to analyze the plausible effects of land-use change, climatic change, and carbon policy on carbon dynamics. The results show that the estimated total carbon storage of the YRB’s ecosystem was 21.75 Pg C in 2015, accounting for about a quarter of the total in China. Model simulations projected an overall increase in carbon storage of the YRB’s ecosystem. Under the combined scenarios, land-use change and climate change contributed to total carbon sequestration by 1.45 to 2.02 PgC and 1.64 to 2.00 PgC, respectively. Under the carbon tax scenario, due to an increase in the extent of forest driven by different carbon regimes, the YRB was projected to absorb 1.26 to 2.32 PgC by 2050. Several regions had been projected under threats of severe carbon losses, including a few places with high present-day carbon density in the middle reaches of the YRB. Our results could provide a more complete picture of carbon sequestration potential of the YRB’s ecosystems, which could benefit the formulation of nature-based solutions.

An efficient energy planning model optimizing cost, emission, and social impact with different carbon tax scenarios

This study proposes a modified energy planning model that considers a broad range of future uncertainties. Modifications to hybrid stochastic robust optimization and robust optimization methodology allow for the introduction of multi-objective functions that reflect the various dimensions of energy planning including cost, emission, and social impact. A lexicographical and weighted-sum type multi-objective function are used in formulating the proposed optimization model. Changing the priorities of the objective functions generates different energy policies, which are then compared. Data envelopment analysis is applied to measure the energy efficiency of each optimal energy policy produced by the energy planning model. Energy efficiency is defined as the ability to satisfactorily address five main aspects—cost, emissions, social impact, employment, and security. An updated power development plan for Thailand is used as an illustrative case study. The empirical analysis indicates that a policy prioritizing the environment first, followed by social impact and cost, is the most efficient policy among the five alternatives considered, with an average efficiency score of 0.9988. Sensitivity analysis involving various carbon tax scenarios is used to establish the importance of weight selection in the weighted-sum method. Specifically, the empirical case study reveals that when the weighted-sum method is used, increasing the carbon tax increases the relative policy efficiency score. Results from the case study offer quantitative support for policy makers seeking to devise an efficient energy policy that meets extensive requirements while still dealing with the bounds of uncertain future projections.

Design of biobased supply chains on a life cycle basis: A bi-objective optimization model and a case study of biobased polyethylene terephthalate (PET)

Bioplastics are considered a sustainable alternative to (partly) substitute fossil-based plastics. Nevertheless, it is still uncertain if the use of biomass for the production of bioplastics can mitigate the environmental impact of fossil-based plastics and simultaneously provide economic benefits. An optimization model is proposed to design biobased supply chain networks that account for economic (total costs) and environmental (greenhouse gas emissions) criteria. Life cycle costing and life cycle assessment were used to evaluate the economic and environmental costs of the biobased polyethylene terephthalate (PET) production using sugar beet and wheat as feedstock. The 100% biobased PET production evidenced higher economic and environmental costs than the 30% biobased PET production. The feedstock selection played a key role, whereas the use of wheat for both 30% and 100% biobased PET had the highest costs and greenhouse gas emissions. It is highlighted that the economic performance of the biobased terephthalic acid (PTA) production, the feedstock selection (sugar beet), and the carbon tax scenario (>100 €/t CO 2 ) are key parameters for designing a sustainable biobased PET supply chain.

Modelling low carbon electricity generation of an integrated ASEAN power grid

In 1997, 10 economies of the Association of Southeast Asian Nations (ASEAN) established the ASEAN Power Grid (APG), a cross-border interconnection network that effectively uses regional energy resources. This study aims to quantify the effect of ASEAN power grid interconnection on electricity exports-imports between south-east Asia economies and its implications for renewable energy shares and carbon emission in power generation. Three scenarios are assessed in this model. The Base Scenario simulates APG parameters in 2030, considering four existing interconnections and those interconnection projects currently under construction. The second scenario, HAPUA Scenario, includes all the future interconnection projects outlined in the HAPUA report. The carbon tax scenario as the last scenario, aims to evaluate whether carbon pricing policies in Southeast Asia may incentivise cleaner energy and renewable energy development in the region. Under the HAPUA Scenario, Indonesia increases coal and/or gas-fired generation for electricity exports, contributing to a slight increase in CO2 emissions from power generation for the ASEAN region. It appears that carbon price affects the choice of electricity generation and incentivise cross-border electricity trade. Under the carbon tax scenario, emissions will decline to 719 MtCO2 or 22% lower than the base scenario and 24% than the HAPUA scenario.

The emission abatement of enterprises in China: a Bayesian DSGE approach under carbon tax scenarios

The emission abatement of enterprises in China: a Bayesian DSGE approach under carbon tax scenarios

The emission abatement of enterprises in China: a Bayesian DSGE approach under carbon tax scenarios

The emission abatement of enterprises in China: a Bayesian DSGE approach under carbon tax scenarios

Distributional effects of carbon pricing when considering household heterogeneity: An EASI application for Austria

This paper studies the distributional impacts of a carbon tax in Austria and explores compensating measures to mitigate negative side effects. We extend previous studies by focussing on household heterogeneity, i.e. how housing attributes and socio-demographics govern a household's vulnerability to energy price increases. We apply the EASI demand system, which captures non-linear Engel curves and heterogeneous preferences; both crucial to estimate energy consumption. By simulating stylised, separate price increases we identify how seemingly overall similar welfare effects differ, depending on the energy good taxed, the region a household lives in, year of construction and household composition. These impact channels, with the severity of impacts differing according to various household characteristics are also reflected by the carbon tax scenario and reveal the importance of targeted support schemes. Although, each of the tested transfer schemes is able to enhance equality and cushion negative welfare effects, transfer schemes focussing on household size or on particular vulnerable population segments show the strongest effects in terms of equality, proportionality of the tax burden and welfare. Consequently, in order to yield a socially fair energy or carbon tax regime, taking household heterogeneity into account is essential.

Application of System Dynamic Modelling for Evaluation of CO2 Emissions and Expenditure for Captive Power Generation Scenarios in the Cement Industry

Cement manufacturing is an emission-intensive process. The cement industry is responsible for 8% of the global CO2 emissions, and produces a ton of cement uses up to 102 kWh of electrical energy, leading to a significant amount of indirect emissions depending on the emission intensity of the electricity source. Captive power generation can be potentially utilised as a mitigation approach to reduce emissions and as well as expenditure on electricity tariffs. In this study, a system dynamic simulation model is built to evaluate the impact of captive power generation on a cement plant’s net emissions and expenditure through electricity use, under different scenarios for carbon-tax, grid emission factor, and electricity tariffs. The model is then utilised to simulate a reference plant under realistic scenarios designed based on the conditions in Germany and United Arab Emirates. Furthermore, the model is utilised to calculate the payback period of investments on captive power plants under different carbon tax scenarios. The study concludes that a carbon tax policy on emissions through electricity utilisation could have an impact on incentivising the use of captive power generation and would lead to fewer emissions and expenditure during the cement plant’s lifetime.