Emission Tax Research Articles

Renewable fuel production and the impact of hydrogen infrastructure — A case study of the Nordics

Hard-to-electrify sectors will require renewable fuels to facilitate the green transition in the future. Therefore, it is crucial to identify promising production locations while taking into account the local biomass resources, variable renewable energy sources, and the synergies between sectors. In this study, investments and dispatch operations are optimised of a large catalogue of renewable fuel production technologies in the open-source software SpineOpt, and this is soft-linked to the comprehensive energy system model Balmorel. We analyse future production pathways by comparing various levels of hydrogen infrastructure, including large-scale hydrogen storage, and assess system impacts. The results indicate that methanol may provide synergies in its multipurpose use as an early (2030–2040) shipping fuel and later as an aviation fuel through further refining if ammonia becomes more competitive (2050). We furthermore show that a hydrogen infrastructure increases the competitiveness of non-flexible, hydrogen-based fuel production technologies. Offshore electrolysis hubs decrease energy system impacts in scenarios with 105 TWh of Nordic hydrogen export. However, hydrogen export scenarios are much costlier compared to scenarios with no export unless a high hydrogen price is received. Finally, we find that emission taxes in the range of 250–265 €/tCO2 will be necessary for renewable fuels to become competitive.

Renewable energy expansion under taxes and subsidies: A transmission operator’s perspective

This paper investigates the role of a transmission system operator within a carbon footprint reduction strategy incorporating carbon taxes and renewable energy generation subsidies in the decentralised energy market. This is achieved via an optimisation bi-level model in which a welfare-maximising transmission system operator makes investments in transmission lines at the upper level while considering power market dynamics at the lower level. To account for the deregulated energy market structure, this paper assumes that the generation companies at the lower level make capacity investments as price-takers in perfect competition. Considering alternative transmission infrastructure expansion budgets, carbon emission taxes and monetary incentives for renewable energy generation capacity expansion, the impact of alternative compositions of these factors is analysed against three output factors: the share of renewable energy in the generation mix, total generation amount, and social welfare. The proposed modelling assessment is applied to an illustrative three-node instance and a case study considering a simplified representation of the energy system of the Nordic and Baltic countries. The results highlight that, under certain circumstances, renewable energy generation subsidies may lead to an increase of renewable energy in the generation mix followed by a simultaneous fall in the total generation amount. Nevertheless, when applied together, these three measures demonstrated a positive impact on all output factors within Nordics’ and Baltics’ energy systems. The experiments additionally suggest that considering the high value of the carbon tax does not have an impact on the output factors while the composition of high values of renewable energy generation subsidies and budget for transmission infrastructure expansion has the strongest effect.

Working along both lines? The relationship between government green publicity and emissions tax

Emissions reduction has long been the most concerning environmental issue. To promote emissions reduction among firms, governments have adopted mandatory tools such as emissions tax and voluntary guidance such as government green publicity. This paper investigates the interaction between emissions tax and government green publicity and analyzes the optimal decisions when the government combines these two policies. The results show that these two policies are mutually reinforcing, that is, the enhancement of one leads to the enhancement of the other. Moreover, although these two policies are complements in reducing emissions, it may be not wise to combine them to improve social welfare. Specifically, when the emissions damage is small, these two policies are substitutes in improving social welfare. More surprisingly, this substitutive relationship will increase with the baseline emissions level. This suggests that governments combining these two policies may not suitable for addressing high-pollution industries. When governments combine these two policies, intuitively, the emissions tax level and publicity degree will increase with tax implement efficiency. However, the results show that when the emissions damage is relatively large, the emissions tax level and publicity degree will decrease with tax efficiency. We also find that under asymmetric firms, heightened competition will improve the social welfare and the strategic complementarity of the two policies, albeit at the cost of firms’ profits. Moreover, we analyze the influence of budget constraints, revealing that as the budget limit level decreases, the strategic complementarity can initially decline but subsequently exhibit an upward trend.

Complementary taxation of carbon emissions and local air pollution

Current decarbonization policies neglect damages from local air pollutants. We analyze the trade-off between complementary taxation of carbon emissions and local air pollution. We quantify results for the European power market until 2050. Taxing only air pollution results in system cost of 6,475 billion € and fosters nuclear deployment. Additional external cost accumulate to 5,890 billion €. Taxing only carbon yields system (external) cost of 8,263 (717) billion € and promotes carbon-capture-and-storage deployment. Taxing both yields (external) cost of 7,697 (1,118) billion €. Moderate carbon taxation can be complementary to a primary policy of air pollution abatement. On the contrary, a primary policy of decarbonization stands in trade-off with air pollution abatement in the long-term.

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.

Climate change, tipping points, and economics

This paper discusses the response of the economics profession to a possible occurrence of tipping points in natural systems, with a drop in welfare. For a climate tipping point, the hazard-rate model is relevant, and the paper shows that in a Ramsey growth model with climate tipping, the effect on policy is increased saving and increased taxation of greenhouse gas emissions. Climate change is often seen as a tragedy of the commons because incentives to deviate undermine cooperation and prevention of climate change. However, a climate tipping point can be prevented in a Nash equilibrium or with partial cooperation if the drop in welfare is sufficiently high. In case of uncertainty about the threshold, this result remains if the uncertainty is not too large. In the conclusion, the paper makes a few remarks on including tipping points in teaching environmental and resource economics.

Will the centralization of carbon pricing revenue in the European Union lead to laxer climate policy?

AbstractWe analyze the economic impact of using carbon pricing revenue to fund the European Union (EU) budget. Such a reform would redistribute from countries with above‐average carbon‐intensive production to less‐carbon‐intensive countries. Once the reform is implemented, the low‐carbon countries will prefer a lower carbon price (i.e., laxer climate policy at the EU level) than before the reform, and vice versa. As a result, EU climate policy becomes less ambitious and less disputed, where quantitative impacts presumably remain small. Weaker incentives for national governments to enforce emission taxes after revenue centralization might also contribute to higher emissions.

Implementation of the Paris Climate Agreement in the Legal Systems of the EAEU Member States

The Paris Climate Agreement provides for the acceptance by the participating States of obligations, which this treaty enshrines as «nationally determined contributions» (NDC). The goal of these commitments is to reduce greenhouse gas emissions and keep global temperature increases well below 2°C compared to preindustrial levels. This mechanism has a number of legal features: first, each state establishes NDC independently, reports them to the Conference of the Parties to the United Nations Framework Convention on Climate Change (UNFCCC), acting as the meeting of the Parties to the Paris Agreement, and registers them with the Secretariat. From this moment, a new international legal obligation of the state to implement the NDC arises. Secondly, it can be changed only in the direction of greater «ambition», that is, by increasing targets for limiting greenhouse gas emissions. Thirdly, the Paris Agreement does not require the coordination of national measures with the rest of the parties to the treaty. Each participant in the Paris Agreement represents an NDC, which determines the scope of its own obligations without the participation of other states, unlike the mechanism provided for in the GATT and GATS, where WTO member states are required to coordinate their national measures with the rest of the participants (Goods schedule / Services schedule). Fourthly, the monitoring mechanism provides for the first stage of summing up in 2023, when an assessment of the progress towards achieving the goals of the Paris Agreement will be given.A comparative analysis of the NDC of the EAEU member states, all of which are parties to the Paris Agreement, allows us to generalize. The Republic of Kazakhstan and the Russian Federation announced the achievement of carbon neutrality by 2060, the rest of the states — by 2050. Some states (the Republic of Belarus, the Kyrgyz Republic, the Republic of Kazakhstan) have set two targets for the implementation of NDC: conditional (achievement of the indicator with international financial support and access to modern technologies) and unconditional (achievement of the indicator at own expense). The level of development of the legal framework for the implementation of the NDC of the Republic of Armenia, the Republic of Belarus and the Kyrgyz Republic is inferior to the level of the Russian Federation and the Republic of Kazakhstan in terms of limiting greenhouse gas emissions, turnover of carbon units and taxation of carbon emissions (introduction of a carbon tax). At the EAEU level, the member states have adopted a roadmap on the climate agenda, and much work remains to be done to develop a regulatory framework.

Key Performance Indicators for Decision Support in Building Retrofit Planning: An Italian Case Study

To achieve climate and energy goals in the building sector, the current pace of renovating existing structures must double, overcoming prevailing barriers. Key Performance Indicators play a pivotal role in science-based decision making, emphasizing both direct and indirect benefits of building retrofits. The authors aim to contribute to proper metric identification for multi-perspective building performance assessment and formulate a methodology supporting energy planning decisions. They introduce the Global Cost per Emission Savings (GCES), an aggregated indicator encompassing both public (CO2 emissions) and private (global cost) perspectives of diverse retrofit technologies for building HVAC systems. Applied to the Italian residential building stock via the Reference Building approach, the methodology is tested using condensing gas boilers, biomass boilers, and electric heat pumps, revealing diverse environmental and economic performances. Addressing the establishment of effective decision-support tools for policymakers, the paper explores the potential impact of various policies on the favorability of technologies. Different policy scenarios are delineated to analyze how distinct approaches may influence the attractiveness of technologies. Notably, in the baseline scenario, biomass boilers hold an advantage over heat pumps according to the GCES index. However, scenarios involving technology-specific incentives or a greenhouse gases emission tax failed to alter the technological ranking, leaving heat pumps financially uncompetitive. In contrast, the TXPM scenario positions heat pumps as the most financially appealing option, penalizing biomass boilers for high particulate matter emissions.

Environmental policies with the excess burden of public funds and privatisation

AbstractThis study investigates the interaction of environmental policies with the shadow cost of public funds and the efficiency of green research and development (R&D), while considering the presence of a public firm. In the policy combination of emission taxes and green R&D subsidies, we find that it has an implementable region where the shadow cost is neither high nor low, but the green R&D efficiency is high. We also demonstrate that the privatisation of public firms decreases the rates of both emission taxes and green R&D subsidies under a single policy regime. This increases (decreases) the implementable region of the policy combination of the emission tax (green subsidy) and is only implementable in the presence of a public firm. Finally, privatisation is shown to increase welfare when the shadow cost is lowest and green R&D is less efficient. These findings highlight that public ownership substitutes for environmental policies, while the shadow cost of public funds and the green R&D efficiency are critical when privatising public firms.

Analysing the response of CO2 emissions to business cycle in a developing economy: evidence for South Africa post-apartheid era

Introduction: This research addresses the response of CO2 emissions to economic fluctuations in South Africa post-Apartheid, covering the period 1990–2018. While previous studies focused on developed countries, limited attention has been given to sub-Saharan developing nations. The study challenges the assumption of constant emissions elasticity in current forecasts.Methods: The study employs a two-step strategy. Firstly, the rolling window regression with Hodrick-Prescott filtering was used to investigate whether the CO2 emissions elasticity varies over time. Secondly, a Markov-switching approach was used to examine the regime-switching behavior in GDP.Results and Discussion: Results suggest that CO2 emisssions elasticity varies over time. This was confirmed through alternative filtering techniques (Christiano-Fitzgerald, Baxter King, and the Butterworth filter). Markov-switching analysis revealed a regime-switching behavior in GDP, indicating negative CO2 emissions elasticity during recessions and positive elasticity during expansions. These findings persist even when accounting for monetary policy shocks and productivity shocks in the Environmental Dynamic Stochastic General Equilibrium (E-DSGE) model. Noteworthy is that South Africa is among the top 20 greenhouse gas emitters globally.Conclusion and recommendations: The study recommends tailored carbon-pricing policies that are conscious to the countercyclical nature of business cycles. Pricing emissions higher during economic upswings aligns with periods of growth. Additionally, the government is advised to invest in research and development for energy conservation, efficiency, and renewable technologies to counterbalance emissions growth. Implementing emission caps and tax incentives can further enforce pollution abatement measures. Policymakers should consider these asymmetrical responses when addressing global warming challenges in South Africa.

Environmental-economic sustainability of hydrogen and ammonia fuels for short sea shipping operations

Alternative fuels of low or zero carbon content can decarbonise the shipping operations. This study aims at assessing the lifetime environmental-economic sustainability of ammonia and hydrogen, as alternatives to diesel fuel for short sea shipping cargo vessels. A model is employed to calculate key performance indicators representing the lifetime financial sustainability and environmental footprint of the case ship using a realistic operating profile and considering several scenarios with different diesel substitution rates. Scenarios meeting the carbon emissions reduction targets set by the International Maritime Organisation (IMO) for 2030 are identified, whereas policy measures for their implementation including the emissions taxation are discussed. The derived results demonstrate that the future implementation of carbon emissions taxation in the ranges of 136–965 €/t for hydrogen and 356–2647 €/t for ammonia can support these fuels financial sustainability in shipping. This study provides insights for adopting zero-carbon fuels, and as such impacts the de-risking of shipping decarbonisation.

Evaluating The Nexus of Renewable Energy's in Economic Growth Realities: Autoregressive Distributed Lag Approach

This article about energy in an economic context, energy fossil has become one of the causes of issues faced by humanity. These problems have cascading impacts, ranging from climate damage to individual health and global socio-economic conditions. This study aimed to elucidate the effects of renewable energy, fossil energy, labor force, foreign direct investment and carbon dioxide emissions on economic growth. The analytical tool employed was the ARDL bound test. Secondary data from annual series spanning from 1986 to 2020. The study found a two-way cointegration between labor force, foreign direct investment, and economic growth. Based on the methodology used, conclusions were drawn regarding short-run and long-run relationships. In the short run, both fossil and renewable energy had unidirectional relationships with economic growth. Carbon dioxide emissions had a negative impact on economic growth in the short-run and the long-run. Labor force and economic growth exhibited a two-way relationship in the long-run. Consequently, energy transition policies and the imposition of carbon emission taxes could have negative short-run implications for Indonesia's economic growth, while the reverse may be true in the long run. Economic growth may reach a peak and then decline and policymakers should maximize existing non-renewable energy sources. A policy requiring to control more fossil fuel energy sources and discover untapped reserves is worthy of continuation and even strengthening. The findings provide an understanding of the relationship between renewable energy and economic growth as a necessity for the energy transition. The study has limitations in assumptions when interpreting the findings.

The Effect of Green Taxation on Financial Performance of Selected Oil and Gas Firms in Nigeria.

This study investigated the effect of green taxation on financial performance of selected oil and gas firms in Nigeria for the period 2017-2022. The specific objectives were to investigate the effect of carbon emission taxes; to find out the effect of petroleum profit tax; and to investigate the effect of industrial pollution tax on financial performance of selected oil and gas firms in Nigeria for the period 2017-2022. The model included the total assets of the oil and gas firms as dependent variable. The study adopted ex post facto research and employed times series data sourced from the annual financial records of the oil and gas firms, and the Federal Inland Revenue Service (FIRS). Evidence of longrun relationship was found among the model variables through the Johansen test, and a fast speed of adjustment at 32.01% annually. The major findings of the study are: carbon emission taxes had significant negative effect on financial performance of oil and gas firms in Nigeria; petroleum profit tax has significant negative effect on financial performance of oil and gas firms in Nigeria; and industrial pollution tax has significant negative effect on financial performance of oil and gas firms in Nigeria. Based on the findings, the study concluded that green taxation had significant negative effect on the financial performance of oil and gas firms in Nigeria. The study recommended that: the policymakers should design a strategy toward reviewing the carbon emission taxes due to evidence of negative shock on the oil and gas firms; the petroleum profit tax should also be reviewed down in order to mitigate risks arising from their operation which affect their performance; the government should further increase the industrial pollution tax rate, this will deter industries from indiscriminate pollution of the environment, restore investor confident and stabilize stock market in Nigeria.

ЕКОНОМІЧНА ДОЦІЛЬНІСТЬ ДЕКАРБОНІЗАЦІЇ УКРАЇНСЬКОГО АГРАРНОГО СЕКТОРУ

In modern conditions, globalization has closely linked geopolitical and geoeconomic processes throughout the world. The war unleashed by Russia against Ukraine is reflected in global economic processes. The domestic agar business is becoming the most important export sector of the national economy. Therefore, increasing the competitiveness of these enterprises, adaptation to the requirements of the EU market, the search for energy efficiency is an urgent problem, the solution of which will stabilize the global food market. A significant additional obstacle on the way of Ukrainian agricultural products to the European market may be the policy of the European Union regarding the "green transition", because it will be taxed when crossing the border for the carbon footprint. This article notes the importance of using clean energy technologies in domestic agribusiness, considers the ways of decarbonization of the greenhouse economy using modern hydrogen technologies. The possibility of minimizing carbon emissions into the atmosphere due to technical re-equipment is being investigated. The advantages and disadvantages of the use of certain technologies are given, and the main goals that the enterprise will achieve due to such a transformation are also described. The convenience and ease of the proposed transformations of the production process is based on the adaptation of the equipment available on the market. Ways to solve the problem of balancing ща electrical energy obtained from renewable energy sources are proposed. Ways of decarbonization of the production process of agricultural products were developed for an existing enterprise, using the example of its greenhouse economy. The application of the specified measures allows domestic agricultural enterprises to diversify their activities and adapt to the effect of the emission tax when crossing EU borders and increase their own competitiveness. The implementation of these technologies is important not only for the development of agribusiness, but also for the domestic energy and chemical sectors, in addition, it improves the state of the environment and strengthens the range of domestic exports.

Renewable Syngas Generation via Low-Temperature Electrolysis: Opportunities and Challenges.

The production of syngas (i.e., a mixture of CO and H2) via the electrochemical reduction of CO2 and water can contribute to the green transition of various industrial sectors. Here we provide a joint academic-industrial perspective on the key technical and economical differences of the concurrent (i.e., CO and H2 are generated in the same electrolyzer cell) and separated (i.e., CO and H2 are electrogenerated in different electrolyzers) production of syngas. Using a combination of literature analysis, experimental data, and techno-economic analysis, we demonstrate that the production of synthesis gas is notably less expensive if we operate a CO2 electrolyzer in a CO-selective mode and combine it with a separate PEM electrolyzer for H2 generation. We also conclude that by the further decrease of the cost of renewable electricity and the increase of CO2 emission taxes, such prepared renewable syngas will become cost competitive.

ВВЕДЕНИЕ УГЛЕРОДНОГО НАЛОГА КАК МЕРЫ ПО СНИЖЕНИЮ ЭМИССИЙ ПАРНИКОВЫХ ГАЗОВ В КАЗАХСТАНЕ: ОСНОВНЫЕ ВЫЗОВЫ И ПРОБЛЕМЫ

An overview of the problem of taxation of greenhouse gas emissions for developed countries of the world is presented in order to use the accumulated experience for Kazakhstan. The review was prepared based on materials from foreign articles and international documents. When implementing such an instrument as carbon taxation, there are a lot of problems - from lobbying the interests of individual companies or industries to social tension in society, which leads to significant risks. Despite the effectiveness of such a tool, it is necessary to clearly separate goals, conduct an explanatory campaign and not expect quick results. A separate issue is the distribution of collected funds for the implementation of projects to curb climate change.

Technoeconomic Assessment of Large-Scale Ethylene Production via the Electrochemical Reduction of CO2

In the last five years, several works have shown that CO2 may be electrochemically reduced to C2 products such as ethylene at current densities over 1 A cm-2 and Faradaic efficiencies over 70%. For the first time, these current densities and Faradaic efficiencies are comparable with commercial electrolytic processes. For reference, over 100 million metric tons per year of chlorine per is manufactured via the Chlor-alkali process at current densities near 0..4 A cm-2 and Faradaic efficiencies to Cl2 over 80%. While the current densities and Faradaic efficiencies for CO2 reduction are compelling; other metrics such as energy efficiency, selectivity, carbon efficiency, electrolyzer scaling, electrolyzer costs and post-electrolysis separation are not yet at the levels needed for commercialization.In this presentation, we consider the technoeconomics of ethylene production at large scales (25,000 to 150,000 metric tons per year). We investigate the impact of cell potential, Faradaic efficiencies, conversion level, process scaling and post-electrolysis separations on the cost of electrolytic ethylene production. Our results indicate that the “green” ethylene made using CO2 as a feedstock requires anywhere from approximately 1 to 10 times greater manufacturing costs than conventional cracking of ethane depending on factors such as electrical energy cost, electrolyzer costs and other parameters. In this case, we consider key technical and economic needs including: price premiums, tax incentives, CO2 emission taxes, and other factors that could enable electrolytic ethylene manufacturing at large scales within the next decade.

Copper economic dynamics: Navigating resource scarcity, price volatility, and green growth

This research delves into the intricate discourse surrounding nations' pursuit of sustainable development between 2000 and 2020, focusing on ten major global copper-producing countries and leveraging international databases. It reveals a positive correlation between historical and current green growth efforts, an inverse relationship between copper prices and sustainable development, and explores the impact of Foreign Direct Investment (FDI) in the energy sector on energy inefficiency. Emphasizing the financial dynamics within the copper industry, the study highlights the potential negative impact of increased tax revenues on green growth. Furthermore, it underscores the pivotal role of financial conditions and economic context in shaping sustainable development, advocating for a balanced policy approach. To advance green growth in the copper industry, strategic interventions are proposed, encompassing effective copper price management, the promotion of green technological advancements, attraction of green FDI, implementation of emission taxation systems, advocacy for sustainable corporate management, and leveraging AI and big data analytics to optimize green solutions and minimize ecological footprints.

Mineral resources and the green economy: A blueprint for sustainable development and innovation

This study assesses the factors influencing sustainable growth in agriculture and industry across 14 Asian economies, utilizing data spanning from 2000 to 2020 and employing the System-GMM (Generalized Method of Moments) technique. The findings reveal a noteworthy positive impact of a 1% increase in patent applications on the green growth of the industry, while no such effect is observed in agriculture. Mineral resource efficiency emerges as crucial for green growth, exhibiting significant improvements. Conversely, heightened internet access is associated with reduced green growth due to increased electricity consumption from fossil fuels. Inward foreign direct investment is found to impede green growth, highlighting the need for a transition to sustainable sectors. Additionally, the Consumer Price Index negatively affects potential green growth. Lastly, a higher GDP per capita positively influences green growth, underscoring the role of income levels in prioritizing sustainability. Recommendations include supporting green research and development, fostering a robust green finance market, digitalizing green finance, and implementing emissions taxation on mineral exploitation companies to promote resource efficiency and sustainability.