Effect Of Carbon Pricing Research Articles

Evolutionary Game and Strategy Analysis of Carbon Emission Reduction in Supply Chain Based on System Dynamic Model

At the 75th session of the United Nations General Assembly, China proposed the ambitious goal of achieving carbon peaking by 2030 and carbon neutrality by 2060. To investigate the impact of emission reduction behaviors of upstream and downstream enterprises in the supply chain, this paper focuses on the influencing factors of the supply chain enterprises’ emission reduction decision-making. The study aims to explore the emission reduction behaviors of these enterprises in the context of China’s carbon trading market. Using the theory of system dynamics, an evolutionary game model was developed and simulated using AnyLogic software. The simulation analyzed the effects of carbon price, subsidies, and punishment strategies on the emission reduction decisions of supply chain enterprises, providing insights into their behavioral impact. The results demonstrate that punishment, subsidy intensity, and carbon price changes all influence the emission reduction decisions of upstream and downstream enterprises. Suppliers are more sensitive to carbon price, while manufacturers are more sensitive to subsidy intensity. Additionally, the closer the equilibrium carbon price, subsidy, and market are, the shorter the time for the emission reduction probability of both enterprises to stabilize. Therefore, it is recommended that supply chain companies increase their awareness of environmental responsibility and enthusiasm for green innovation, actively respond to the carbon trading system, improve their internal subsidy system, and promote green technology innovation.

The combining and cooperative effects of carbon price and technological innovation on carbon emission reduction: Evidence from China's industrial enterprises

To achieve the carbon peaking and neutrality targets in China, carbon price and technological innovation will play increasingly important roles in recent future. It is widely-known that carbon price and technological innovation can contribute significantly to emission reduction, respectively; but it is still unclear whether the cooperation effects of carbon price and technological innovation would be positive or negative. In this paper, we assume that there are 3 types of emission reduction measures in China's industrial enterprises, which are improvement of energy efficiency, adjustment of energy structure, and substitution of pollution inputs and non-pollution inputs; then we introduce carbon price and technological innovation respectively and simultaneously, and establish 12 scenarios based on the Data Envelopment Analysis models combined with material balance principal (DEA-MBP), and estimate the additional emission reductions and additional production costs of China's industrial enterprises when carbon price and technological innovation exist respectively or simultaneously. The counterfactually estimating results show that there would be significant regional and sectorial heterogeneities in carbon emission reduction characteristics for China's industrial enterprises. If low-carbon technologies in some sectors have the ability to reduce carbon emissions at the expense of high additional production cost, carbon pricing policies would encourage enterprises to adopt new mitigation technologies and increase additional emission reduction by more than 20%, especially technologies focusing on the adjustment of energy structure and the substitution of pollution inputs by non-pollution inputs. However, in some sectors which have already been covered by carbon pricing policies, the additional carbon pricing policy may not have a significant effect on emission reduction, and the emission reduction would decrease by 10%.

Carbon Taxation and Greenflation: Evidence from Europe and Canada

Abstract This paper studies the effects of carbon pricing on inflation dynamics. We construct a sample of carbon taxes implemented in Europe and Canada over three decades and estimate the response of inflation and price components to carbon pricing. Our empirical results suggest that carbon taxes did not significantly increase inflation, with dynamic effects estimated around zero in most specifications. Instead we find support for relative price changes, increasing the cost of energy but leaving the price of other goods and services unaffected. This is consistent with previous findings on the limited aggregate economic costs of carbon taxes. Based on the cross-section of taxes in Europe, we provide suggestive evidence that the response of inflation was especially muted in countries with revenue-neutral carbon taxes and autonomous central banks that can accommodate potential inflationary pressure associated with carbon pricing.

Role of carbon tax in the widespread integration of sustainable strategies in buildings

The effect of carbon pricing on greenhouse gas emissions and economic development is nowadays of great interest. However, despite the growing use of sustainable approaches in buildings, no study has examined the influence of carbon taxation on their effectiveness in several regions worldwide. This paper investigates the impact of three carbon tax levels (high, low and zero) on the environmental and economic benefits of applying three strategies: photovoltaic, earth-to-air heat exchanger and thermal insulation. The performance of these techniques is evaluated for a typical residential building in nine regions worldwide with dissimilar climates (cold, temperate and semi-arid). The findings show that the greatest life cycle CO2 emissions benefits are obtained in locations with zero-carbon tax, which could be attributed to the elevated CO2 emission factors in these places. In contrast, the higher savings-to-investment ratios and the shortest discounted payback periods are exhibited in locations with high-carbon tax, followed by the ones with low-carbon tax for almost all investigated techniques. Overall, the savings-to-investment ratio and discounted payback period are, on average, 3.80/2.02 and 6.74/14.43 years in places with high/zero-carbon tax, respectively. Moreover, a $10/tCO2e rise in carbon tax increases the profitability from sustainable techniques by about 2%, 7% and 5% in cold, temperate and semi-arid climates, respectively. Therefore, levying carbon taxes could be essential in encouraging building owners to adopt sustainable strategies. The study's findings could be generalized to other regions worldwide characterized by similar energy, economic and environmental contexts, mainly carbon tax, energy prices, carbon emission factor and climate type.

Effects of Carbon Pricing in Germany and Spain: An Assessment with EMuSe.

Effects of Carbon Pricing in Germany and Spain: An Assessment with EMuSe.

Swept under the Rug: Distortionary Effect of Carbon Price on Emissions Disclosure Accuracy

Swept under the Rug: Distortionary Effect of Carbon Price on Emissions Disclosure Accuracy

Distributional effects of carbon pricing by transport fuel taxation

We introduce a new microsimulation model built on household transport data to study the distributional effects of carbon-based fuel taxation of private road transport in Germany. Our data includes car-specific annual mileage, fuel efficiency, and the distinction between fuel types, allowing for a very detailed analysis. The model enables focusing on different household types as well as identifying effect heterogeneity across the income distribution. We compare the recent fuel tax scheme with three policy reform scenarios to empirically test several hypotheses regarding distributional effects of carbon pricing. We find that the legal status quo of the fuel tax has overall regressive effects, with the tax on petrol being regressive and the tax on diesel being progressive. A transformation of the current tax into a revenue-neutral carbon-harmonised fuel tax yields a progressive distributional effect, while an introduction of a new carbon tax on transport fuels is neither clearly regressive nor progressive. Combining both tax schemes also has non-regressive effects. On aggregate, the distributional effects are modest. Subgroup analyses, however, reveal that the individual burden can be substantial. In sum, our results suggest that policy makers face various options for pricing road transport greenhouse gas emissions without causing an overall disproportionate tax burden on low-income households.

On the quality of emission reductions: observed effects of carbon pricing on investments, innovation, and operational shifts. A response to van den Bergh and Savin (2021)

To meet the Paris Agreement targets, carbon emissions from the energy system must be eliminated by mid-century, implying vast investment and systemic change challenges ahead. In an article in WIREs Climate Change, we reviewed the empirical evidence for effects of carbon pricing systems on technological change towards full decarbonisation, finding weak or no effects. In response, van den Bergh and Savin (2021) criticised our review in an article in this journal, claiming that it is “unfair”, incomplete and flawed in various ways. Here, we respond to this critique by elaborating on the conceptual roots of our argumentation based on the importance of short-term emission reductions and longer-term technological change, and by expanding the review. This verifies our original findings: existing carbon pricing schemes have sometimes reduced emissions, mainly through switching to lower-carbon fossil fuels and efficiency increases, and have triggered weak innovation increases. There is no evidence that carbon pricing systems have triggered zero-carbon investments, and scarce but consistent evidence that they have not. Our findings highlight the importance of adapting and improving climate policy assessment metrics beyond short-term emissions by also assessing the quality of emission reductions and the progress of underlying technological change.

Combined effects of carbon pricing and power market reform on CO2 emissions reduction in China's electricity sector

China is pursuing aggressive action to reduce greenhouse gas emissions from its coal-dominated electric power system. Two key strategies are power market reform and carbon pricing. This paper investigates the combined effects of these two strategies in reducing CO2 emissions from power system operations. We develop an economic dispatch model to simulate hourly power supply system operation in China Southern Power Grid in 2018 under fifteen carbon pricing scenarios; these reflect a wide range of policy ambition, from today's carbon prices to much higher ones that aim to instigate aggressive emission mitigation. Our results show that moderate carbon pricing alone is insufficient to effectively reduce CO2 emissions without concurrent power market reform. With power market reform and as carbon prices increase, large coal units supplemented by energy storage witness higher use rates as they supplant smaller coal-fired generators, until a carbon price of 300 RMB/TCO2 phases out coal use in favor of natural gas. Only at carbon prices higher than 300 RMB/TCO2 do emissions begin to decrease appreciably. Geographic disparities emerge among the five provinces that comprise the Southern Power Grid, with Guangdong witnessing the most CO2 emission reduction at high carbon prices, while emission reductions in other provinces are negligible. Carbon pricing also dramatically increases total power system costs, even at low carbon prices. Our results show the necessity of introducing power market reform and carbon pricing policies concurrently if the goal is to reduce CO2 emissions, with the ultimate goal being a carbon price significantly greater than 300 RMB/TCO2. Because both options will be necessary, our research maps a path to deep emission reductions in China Southern Power Grid for investors, analysts, and policy makers as discussions regarding both reforms accelerate.

The effect of carbon pricing on cut-off grade and optimal pit limits in a high grade copper-cobalt deposit

This paper aims to identify the effect that a carbon price will have on the economic viability of a high grade copper-cobalt mine in the Democratic Republic of the Congo, through examination of Scope 1 and 2 emissions produced directly through mining and processing activities. Four scenarios were analysed ranging from no carbon pricing scaling up to $100/t assuming hydroelectric power was unavailable and replaced with coal fired power. Limited academic literature exists that discusses the effect carbon can have on the economics of a mining operation, with literature predominantly focusing on quantities of carbon produced from mining and processing activities. Results show that a $30/t carbon price increases the mining cost by 2%, while the associated cost in processing from coal and diesel consumption producing carbon, results in an increase of 0.2%. Raising the carbon price to $100/t results in the mining cost increasing by 5%, and processing costs increasing by 0.3%. Quantifying the effect of hydroelectric power over coal fired power concludes that processing costs increase by 12.7% resulting in a cut-off grade change removing 2% Cu of the ore from being economic. The revenue factor 1.00 shell examined in all cases varied less than 1% in volume, however undiscounted cash flow varied as the quantity and cost of carbon in each scenario increased. When carbon does not influence the economic viability of the operation, 4.2 Mt of CO2 is produced with mining activities producing 3.6 Mt and processing activities producing 0.6 Mt, respectively. The use of coal for power generation instead of hydroelectric results in 25.3 Mt of carbon being produced over the life of mine from both mining and milling activities, an additional 21.1 Mt when compared to the base case scenario that utilises hydroelectric power. The influence of a carbon price on a high grade copper-cobalt deposit with relative high processing costs due to hydrometallurgy processing requiring gangue acid consumption, has a minor effect on optimal pit limits and cut-off grade.

Effects of Carbon Pricing on Inflation

Effects of Carbon Pricing on Inflation

Assessing Distributional Effects of Carbon Pricing in Israel

Assessing Distributional Effects of Carbon Pricing in Israel

The Geographic Effects of Carbon Pricing

The Geographic Effects of Carbon Pricing

Technology Focus: Reserves Management (December 2021)

The year 2021 has seen improvement in the market fundamentals for the petroleum industry, and merger and acquisition activity has increased. Market volatility and project investment caution, however, are expected to continue as the world adjusts to the “new normal” of the societal, environmental, and economic effects of living with COVID-19 and the climate challenge. Pressure to address environmental, social, and governance (ESG) issues increasingly affects the commercial viability of projects and their corresponding chance of development. Further, entities face reputational, financial, and litigation risk from not maintaining high ESG standards. The papers selected highlight some of these considerations and the importance of using all the tools provided by the industry resource classification systems to navigate projects through to viable and sustainable development reasonably and transparently for all stakeholders. Paper SPE 203422 provides a systematic approach to gathering data consistently and benchmarking projects based on reservoir performance that allows efficient data mining to help identify opportunities. It also highlights the importance of appropriate analogs to underpin recovery potential and field development planning. Paper SPE 206104 highlights the deterministic incremental method for resource evaluation, specifically that it is often difficult to reconcile the incremental method with the deterministic scenario method with forecasts for a different range of uncertainty and commercial projections for the same project. These differences should be mitigated by clearly defining the project that under-pins the evaluation and applying principles from the SPE Petroleum Resources Management System (PRMS). Paper SPE 206322 illustrates the challenges faced when combining reserves and resources management systems in a merger scenario that involves classified or evaluated projects in different ways. Pleasingly, it highlights the use of subclasses, recommended by the PRMS and other global classification systems and increasingly a standard practice. Caution should be taken to ensure consistency and alignment with the PRMS subclasses. Governments globally are announcing net-zero targets and other initiatives for reaching sustainable development goals. Two recommended reading papers focus on the effect of carbon pricing and stream-lining reporting. Paper SPE 205847 describes the new Petroleum Resource Specifications and Guidelines (PRSG) published as supporting documentation for the United Nations Framework Classification (UNFC). The UNFC system is unique in considering technical feasibility separately from economic, environmental, and social viability to provide greater transparency. The UNFC framework and PRSG can be used independently or in conjunction with other classification systems for individual projects and for comparisons between petroleum and other emerging energy projects. Recommended additional reading at OnePetro: www.onepetro.org. SPE 202458 - What Does a Carbon Price Do to Your Reserves and Development Plans? by Daniel Lorng Wong, Gaffney Cline, et al. SPE 203182 - Intelligent Annual Reservoir Performance Reporting System i-ARPR— A Fascinating Journey From a Concept to Reality by Muhammad Navaid Khan, ADNOC, et al. SPE 205847 - Development of the Petroleum Resource Specifications and Guidelines (PRSG)—A Petroleum Classification System for the Energy Transition by Barbara Pribyl, Independent, et al.

Developing a framework to assess the long-term adoption of renewable energy technologies in the electric power sector: The effects of carbon price and economic incentives

Greenhouse gas emissions from the burning of fossil fuels are one of the main causes of anthropogenic climate change. Large-scale deployment of renewable energy can play an immense role in transforming the global energy system and mitigating the emissions. This paper describes the development of a novel framework called MArket Penetration ModeLing of Renewable Energy Technologies in Electric Power Sector (MAPLET-PS). MAPLET-PS assesses the impacts of policy measures such as carbon price and financial incentives on the adoption of renewable energy technologies. The framework was used to develop a case study for the electric power sector of Alberta, a fossil-dominated province in Western Canada. The results show that implementing a carbon price on fossil fuel electric power sources and incentives for renewable energy, along with the phase-out of coal-fired electricity generation, can mitigate 29% of Alberta's electricity sector 2020 GHG emissions by 2050 and reduce GHG emissions from 46.5 Mt of CO2 eq. in 2020 to 23.6 and 29.1 Mt of CO2 eq. per year in 2030 and 2050, respectively, in Alberta. Moreover, these changes can increase the share of renewable energies from 12.5% in 2018 to 30% in 2050. These rates can be achieved by implementing a carbon price along with a 1000 $ incentive per kW new capacity development and 70 $ incentive per MWh electric power generation from renewable sources, from 2021 to 2025, primarily from wind turbines.

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.

Distributional effects of carbon pricing in Brazil under the Paris Agreement

This paper assesses the distributional effects of carbon pricing on Brazilian households. We apply a multi-regional Computable General Equilibrium (CGE) model with representation of multiple households according to a family expenditure survey. Important questions for policy makers in Brazil are addressed. What are the economic effects of introducing carbon pricing in Brazil? Is there a double dividend, with economic and environmental benefits, when carbon revenue is recycled through tax rebates? Could carbon revenue contribute to the financing of social spending and to income distribution improvements in Brazil? Results show that carbon pricing avoids further carbon intensive infrastructure lock-in by further promoting biomass in electricity generation and biofuels in the transportation sector. Lump-sum transfers from carbon revenue help boosting income of lower deciles up to +4.5%, while targeting transfers to most vulnerable groups leads to an income growth of +42.2% by 2030. Brazil has a large gap in terms of effective carbon pricing when compared to other countries that could be addressed in the context of the ongoing tax reform debate, with carbon revenue contributing to the financing of social spending. Our analysis examines different policy design options and contribute to the debate about fiscal reform and socioeconomic effects of carbon pricing in Brazil.

Carbon pass-through rates on spot electricity prices in Australia

This study assesses the impact of the Australian Carbon Pricing Mechanism (CPM) on electricity prices in the National Electricity Market (NEM). An econometric model is designed to examine the influence of short-run marginal costs, electricity demand and emission intensities on carbon pass-through to spot electricity prices. Our sample period from July 2009 to June 2016 allows us to analyse three different sub-periods in order to quantify pass-through effects: the period before the CPM, the period when the pricing mechanism was effective, as well as the period after its repeal. Therefore, our study allows a comprehensive evaluation of the effect of carbon pricing on the Australian electricity spot market. Our results demonstrate a high degree of carbon costs pass-through across the considered markets, while the increase in electricity prices typically exceeds carbon costs, in particular for the markets in New South Wales, Queensland and South Australia. Furthermore, we find a negative relationship between carbon pass-through rates and emission intensities in the regional markets: pass-through rates were relatively low for Victoria that is characterised by electricity generation from fossil fuels and high emission intensities, while they were the highest for South Australia, a market with the lowest emission intensities and a higher share of renewable energy generation. We also find that for most markets, emission intensities were only reduced by a relatively small margin during the tax period and electricity prices have never reverted back to their pre-tax levels after the repeal of the tax. • The impact of the Carbon Pricing Mechanism (CPM) on Australian spot electricity prices is examined. • Results demonstrate that consumers were bearing the costs of carbon rather than generators. • Carbon costs pass-through estimates range from 100% to 290% across regional markets. • Evidence for a minor reduction in emission intensities during the CPM period is found. • Spot prices did not revert back to their pre-CPM levels after abolishment of the CPM.

Households' Energy Demand and the Effects of Carbon Pricing in Italy

This paper proposes a novel methodology to estimate the demand and elasticity of electricity, heating, and private transport fuels by aligning the microdata of the Italian Household Budget Survey with several external sources. These estimates are used to evaluate the effects of a set of one-off carbon taxes on energy demand and expenditure. According to our simulations, the increase in energy prices prompted by carbon taxation would decrease energy demand for all uses considered. Our simulations suggest that the effects of carbon taxation are generally regressive: expenditure would increase more for poorer households while their energy demand is compressed. The carbon tax could achieve a significant decrease in GHG emissions and raise revenues, which could be recycled to compensate vulnerable households or reinvested to support the energy transition.

Education Quality, Green Technology, and the Economic Impact of Carbon Pricing

Carbon pricing is increasingly used by governments to reduce emissions. The effect of carbon pricing on economic outcomes as well as mitigating factors has been studied extensively since the early 1990s. One mitigating factor that has received less attention is education quality. If technological change that reduces the reliance of production on emissions is skill-biased, then carbon pricing may increase the skill premium of earnings and subsequent wage inequality; however, a more elastic skill supply through better education quality may mitigate adverse economic outcomes, including wage inequality, and enhance the effect of carbon pricing on technological change and subsequently emissions. A general equilibrium, overlapping-generations model is proposed, with endogenous skill investment in which the average skill level of the workforce can affect the need for emissions in an aggregate production function. This study uses data on industrial emissions linked to the Organisation for Economic Co-operation and Development’s Programme for International Assessment of Adult Competencies dataset for European Union countries. The findings show that, within countries, cognitive skills are positively associated with employment in industries that rely less on emissions for production and in industries that, over time, have been able to reduce their reliance on emissions for production. In the estimated general equilibrium model, higher cognitive skills reduce an economy’s reliance on emissions for production. Having higher quality education—defined as the level of cognitive skills attained by workers per unit of cost—increases the elasticity of skill supply and, as a result, mitigates a carbon tax’s economic costs including output loss and wage inequity, and enhances its effect on emissions reduction. The implication is that investments in education quality are needed for better enabling green technological innovation and adaptation and reducing inequality that results from carbon pricing.