Emission Tax Research Articles

The spatial spillover effect of higher SO2 emission tax rates on PM2.5 concentration in China

In this paper, the adoption of SO2 emission tax rates higher than the legal minimum standard is regarded as a noteworthy policy reform in China (quasi-natural experiment), and a spatial Difference-in-Differences (Spatial-DID) model is constructed to test the direct effects (local effects) and indirect effects (spatial spillover effects) of SO2 emission tax policy reform on PM2.5 concentrations in the atmosphere of 285 China’s cities. The estimation and calculation results of the Spatial-DID model show that the SO2 emission tax policy reform can significantly reduce local PM2.5 concentration and significantly promote PM2.5 concentration in surrounding areas. The results of heterogeneity analysis show that the SO2 emission tax policy reform can produce a relatively more beneficial spatial spillover effect in eastern cities and higher administrative level cities, while the pollutants emission rights trading and the reform of NOx emission tax rates can produce beneficial spatial spillover effects when cooperating with the reform of SO2 emission tax rates. The results of the mediation effect analysis show that the higher SO2 emission tax rate can aggravate the surrounding PM2.5 pollution by promoting the aggregation level of industrial production factors and the industrial SO2 emission intensity in the surrounding areas, which can support the existence of the pollution heaven effect.

Environmental delegation versus sales delegation: a game-theoretic analysis

AbstractRecently, in their 2019 paper, Poyago-Theotoky and Yong consider a managerial Cournot duopoly with pollution externalities and emission taxes and propose an explicit environmental incentive in a managerial compensation contract. The authors compare several exogenous equilibria emerging in the symmetric sub-games in which the owner offers either the environmental delegation contract or the standard sales delegation contract: abatement and social welfare (resp. emission taxes) under environmental delegation are higher (resp. lower) than under sales delegation. The present work extends their model using a game-theoretic approach to analyse the asymmetric sub-games, in which only one firm adopts the environmental contract, and adds the contract decision stage. Results show that the environmental contract never emerges as the unique sub-game perfect Nash equilibrium of this non-cooperative managerial decision game. Indeed, if the green R&D technology is efficient, the sales contract emerges as the unique Pareto-inefficient Nash equilibrium. Otherwise, if the green R&D technology is inefficient, multiple Nash equilibria in pure strategies exist (coordination game). Our findings offer direct policy implications.

Market size asymmetry and strategic environmental policy in a Cournot model

The achievement of Sustainable Development Goals (SDG) related to the environment requires identifying new sources of environmental degradation. This paper analyzes how market size asymmetry affects government decisions on environmental policy in the context of bilateral international trade and imperfect competition. We model an international duopoly with market size asymmetry and product heterogeneity. Each firm produces two different products, one for the domestic and one for the foreign markets, where the firms' production generates local emissions. When planning policies, the government in each country must choose between two options: an emission tax or a production subsidy. The findings of our paper underline the crucial role of market size asymmetry in determining the non-cooperative equilibrium policy in a setting where both firms and governments act strategically. We find that an increase in market size asymmetry between countries encourages governments to shift from emission taxes to production subsidies. Therefore, the environmental policy must consider these aspects to achieve greater effectiveness of regulation in favor of the environment. Actions to mitigate increased pollution should regulate production subsidies and improve the practices of governments and companies.

Corrigendum to “Impact of CO2 emission taxation and fuel types on Arctic shipping attractiveness” [Transp. Res. Part D 112 (2022) 103491

Corrigendum to “Impact of CO2 emission taxation and fuel types on Arctic shipping attractiveness” [Transp. Res. Part D 112 (2022) 103491

Non‐cooperative and cooperative environmental R&D under environmental corporate social responsibility with green managerial coordination

AbstractWe consider a polluting Cournot duopoly within a managerial delegation framework and examine conflicting environmental concerns in which the owners pursue strategic environmental corporate social responsibility (ECSR) while the managers undertake diverged environmental research and development (ER&D) investment. We investigate the effects of cooperation in both ECSR and ER&D on a firm's profitability and social welfare and find that managerial coordination has a critical effect on industry emissions, profits, and welfare. In the context of an optimal emissions tax, we show that managerial coordination failure might not occur, but it reduces welfare if the environmental damage is relatively high. We conclude that a pro‐environmental government should encourage cooperative ER&D, especially when owners adopt cooperative ECSR.

Dynamic modeling to analyze the impacts of carbon reduction policies, Iran's electricity industry.

Sustainable development and reducing greenhouse gas emissions require optimizing the structure of energy production as the main factor in the emission of pollutants in Iran's electricity industry. Over the past years, environmental scientists have proposed carbon tax (CT) and carbon emission trading (CET) as policy tools to reduce pollutant emissions in developed and developing economies. Due to poor access to environmental data and the lack of effective pollution control laws and policies in Iran, efforts to realize the effectiveness of these policies in Iran have been inadequate. The present paper establishes a system dynamics model with feedback to fill these gaps in analyzing the effects of the CT and CET schemes. The following eight scenarios were considered and examined: a baseline scenario (BAU scenario), an emission tax scenario, an emission trading mechanism scenario, an energy supply scenario (to increase electricity generation), an emission tax scenario with investment in technology research and development (to increase energy efficiency), a tax scenario on emissions along with increasing energy supply, the scenario of emission trading mechanism with investment in technology research and development, and the scenario of emission trading mechanism with increasing energy supply. The results showed that while both CT and CET policy groups can be effective in reducing carbon emissions in thermal power plants, in the long run, using price tools to maintain energy security reduces the efficiency of policies greatly. Nevertheless, the effectiveness of CT policy in reducing emissions is higher. Also, despite the allocation of revenue from the application of scenarios to the development of renewable energy, the development of this sector cannot compensate for the reduction in the supply of thermal power plants following the implementation of these policies. As a result, other supportive policies are necessary for the further and faster development of the renewable sector and optimizing the energy structure with an emission reduction approach.

On the income elasticity and regressivity of emission taxation

On the income elasticity and regressivity of emission taxation

Optimization of site utility systems for renewable energy integration

Considerable attention has been paid to the electrified energy supply based on renewable energy for achieving carbon-neutrality. A systematic and integrated approach is required to identify optimal operating strategies for the integration of electrified energy sources with conventional utility systems and to understand the techno-economic impact of using renewable energy on industrial energy management. Renewable-integrated industrial utility systems are modeled, which is optimized to investigate economic trade-off between capital investment, fuel consumption, power generation, and CO2 emission tax. Sensitivity of key design parameters is examined with the optimization framework, which allows to gain conceptual understanding on the economic impact of CO2 emission tax and prices of renewable electricity on site-wide heat and power management. Compared to the utility system based on the combustion of fossil fuels only, the operating cost of renewable-integrated system in the case study can be reduced about 14% in the operating cost and 9% in the capital cost through the strategic import of 20 MWe renewable electricity. The presented case studies fully illustrate economic impacts related to the implementation of renewable electricity to industrial utility systems and demonstrate the benefit of process-integrated optimization for renewable energy integration in practice.

Emission taxation, green R&D, and managerial delegation contracts with environmental and sales incentives

AbstractWe extend the analysis of a managerial delegation model with green R&D by incorporating two explicit incentive‐based executive compensation contracts. In the combination of environmental and sales delegations, (i) the incentives are higher than those under a single incentive scheme, (ii) firms' output and abatement efforts are higher, and (iii) total emissions are lower, and (iv) a firm's profits are higher than that under a sales delegation. Therefore, an emission tax policy, along with firms' compensation packages related to environmental delegation, can play a key role in curving market failure and improving welfare.

Sustainability Economic Production Quantity with Warm-Up Function for a Defective Production System

Inventory management seeks to improve manufacturing by contracting inventory costs in a similar fashion to raise efficiency and profit. One approach is to develop inventory management models according to actual production systems. Furthermore, governmental policies in many countries impose many regulations on firms to fulfill the growing demand for a reduction in carbon emissions. Warm-up is a familiar concept in industrial applications. It allows the manufacturing system to work at a higher level of productivity and efficiency, as well as decreasing the number of defective items and maintenance costs. Along with fewer poor-quality items, the system has less waste as scrap items entering the environment and also requires less energy and workload to focus on reworking. The economic production quantity (EPQ) problems with a warm-up as an input parameter have been studied in a few works recently. This paper proposes a production-inventory model which considers the warm-up period as a decision variable and investigates its impact on the total cost. Furthermore, the defective rate is a decreasing linear function related to the warm-up period’s length. The production-inventory model takes into account the carbon emission tax policy. The main aim of this research is to jointly optimize both the length of the warm-up period and the production cycle in order to minimize the total cost of the production-inventory system and, therefore, reduce emitted carbon emissions. The comparison of tax prices and the effect of the proper warm-up period on the amount of carbon emissions are discussed in the sensitivity analysis.

Abatement technology innovation modelling with spillover effects under different market structures

<p style='text-indent:20px;'>In this paper, a firm's research and development (R & D) investments for abatement technology innovation is modeled as a non-cooperative two-stage game. Parameters are introduced to simulate the spillover effects and market structure. Our advanced analysis together with numerical experiments reveals that (i) as the market structure becomes more competitive, the firm's investments for abatement technology innovation under non-cooperative setting is more likely to be preferred to the investments for abatement technology innovation under cooperative setting; (ii) for a given emission tax, the firm's investments for abatement technology innovation increase with the increase of the spillovers, while the investments for abatement technology innovation decrease with the increase of the competition intensity; (iii) for a given emission tax, the optimal solution of the firm's investments for abatement technology innovation is stable for both non-cooperative and cooperative cases.</p>

Thermalvoltaic Cell and toalleviate Climate Change with reversible Emission

Climate change, food scarce and energy crisis are some major problems we human are facing today, the development of the industry emitted excessive CO2 and it causes global warming effect since it is a gas with greenhouse effect. However, we need moderate CO2 emission to meet our demand to the energy for all individual and society activities that maintain our lives and realize our dreams. In fact, CO2 emission is reversible simply by afforesting and agricultural production, plant could just absorb CO2 and water as raw material for photosynthesis using sunlight as energy resource to produce carbohydrate which is the food for any creature on the earth. By accident, it was also found that heat could directly be converted into electricity by a thermal voltaic effect which just altered the non-equilibrium injection in a solar cell from photoemission into thermionic emission, or their combination, it could directly generate electromotive purely by absorbing heat from the environment with material that has thermionic emission under this temperature connected into the p-n junction of a photovoltaic cell, and graphene is promising since it may provide thermionic emission under room temperature more easily since it is a 2-dimensional semi-metal which has many novel properties such as massless electron and relativistic effect at low velocity and probably has no depletion effect with silicon. The CO2 emission could be reversed by more quality agricultural production and the excess heat in the environment could be directly absorbed to produce electricity by thermalvoltaic effect, in this way food scarce and energy crisis could resolve together with climate change, emission tax could be compensated by more production of vegetables and fruits or other vegetal growth.

Emission Tax, R&D Subsidy and Green Innovation of Firms: An Analysis Based on Mixed Oligopoly Theory

Emission Tax, R&D Subsidy and Green Innovation of Firms: An Analysis Based on Mixed Oligopoly Theory

How effective are emission taxes in reducing air pollution?

How effective are emission taxes in reducing air pollution?

Optimal Day-ahead Dynamic Pricing of Grid-connected Residential Renewable Energy Resources Under Different Metering Mechanisms

Nowadays, grid-connected renewable energy resources have widespread applications in the electricity market. However, providing household consumers with photovoltaic (PV) systems requires bilateral interfaces to exchange energy and data. In addition, residential consumers' contribution requires guaranteed privacy and secured data exchange. Day-ahead dynamic pricing is one of the incentive-based demand response methods that has substantial effects on the integration of renewable energy resources with smart grids and social welfare. Different metering mechanisms of renewable energy resources such as feed-in tariffs, net metering, and net purchase and sale are important issues in power grid operation planning. In this paper, optimal condition decomposition method is used for day-ahead dynamic pricing of grid-connected residential renewable energy resources under different metering mechanisms: feed-in-tariffs, net metering, and net purchase and sale in conjunction with carbon emission taxes. According to the stochastic nature of consumers' load and PV system products, uncertainties are considered in a two-stage decision-making process. The results demonstrate that the net metering with the satisfaction average of 68% for consumers and 32% for the investigated electric company leads to 28% total load reduction. For the case of net purchase and sale mechanism, a satisfaction average of 15% for consumers and 85% for the electric company results in 11% total load reduction. In feed-in-tariff mechanism, in spite of increased social welfare, load reduction does not take place.

Trade-off between greenhouse gas emission tax and paddy production

Trade-off between greenhouse gas emission tax and paddy production

Waste emission reduction decision-making for industrial symbiosis chains in a competitive market considering environmental regulations

<p style='text-indent:20px;'>We develop a perfect competitive upstream and downstream manufacturers model in an industrial symbiosis chain that produces partially differentiated products and generates pollution as a byproduct. We investigate the waste emission reduction decision-making of the industrial symbiosis chain in a competitive market while considering environmental regulations imposed by policy-makers or the government in the form of waste emission taxes and subsidies for waste usage. We prove that environmental regulation and market competition positively affect manufacturers' strategies to implement industrial symbiosis. In addition, we discover that implementing industrial symbiosis requires government leadership, while the market mainly plays a supporting role. Similarly, we show that the degree of competition plays a critical role in determining the economic consequences of environmental regulation. Our results suggest that the government or policy-makers should consider market competition when making environmental regulations. Through our simulations, when the upstream and downstream market sizes are the same, we discover that regardless of the market size, as the market competition becomes fiercer, the profit of the centralized model always dominates that of the other models. At the same time, a waste emission contract can be the technique to improve the performance of the decentralized industrial symbiosis chain. We further find that the market size does not affect the manufacturers' final strategies but only has a specific impact on the value.</p>

Sustainable inventory management based on environmental policies for the perishable products under first or last in and first out policy

<p style='text-indent:20px;'>Holistic, quality, and sustainability-based inventory policy for perishable items may prove to be a game-changer amid great concern over the carbon footprint and global economic crises. In this paper, first-in-first-out (FIFO) and last-in-first-out (LIFO) dispatching policies have been used to examine the effect of quality on fresh products' sales mind the sustainability concern. The quality of these products worsens with age. Its deterioration rate follows two parameters, Weibull distribution, as it gives better flexibility for various items subjected to deterioration and demonstrates fitness for a range of shape and scale parameters. An adequate preservation effort such as controlled atmosphere (CA) storage and modified atmosphere packaging (MAP) techniques must be applied during storage and handling to maintain such products' quality. Consumers' purchasing behavior and curiosity towards quality and selling price drive these products' demand variability. The demand has been considered a function of quality and unit selling price of the item. The effect of inflation viz. time value of money has also been taken into account, affecting Authoritarian governments' norms on carbon emission control in taxation have also been considered essential for modern sustainable inventory policies. The present models determine the unit price and lot size for the maximum average profit of the system. The behaviors of models have been investigated using a comprehensive sensitivity analysis that offers important operative implications. It has been found that the first-in-first-out model is more profitable as compared to the last-in-first-out model, the price is very rigid, and little flexibility in price drastically decreases the profit. Backlogging has no impact on the selling price of products and order quantity but reduces the average yield because of carbon emission taxation.</p>

Environmental policy and carbon emissions in business cycles with public infrastructure investment

Governments have the incentive to increase public infrastructure investment for the post pandemic world so as to recover the economy, but in doing so more carbon emissions may be generated. This paper explores how governments should coordinate environmental policy with public infrastructure provision in business cycles to achieve a certain goal of emissions reduction. First, we find that stringent environmental policy is required to realize the emissions reduction goal when there is heavy investment in public infrastructure. Second, we display that in the presence of public infrastructure, the emissions tax is less able to mitigate pollutants than the emissions cap in a productivity shock, and the interaction between environmental policy and public infrastructure can amplify emissions and macroeconomic volatility in a monetary shock. Third, different from the existing literature arguing that optimal environmental policy should be procyclical in business cycles, we show that it could be countercyclical when the government's willingness to provide public infrastructure is small. This paper contributes by incorporating public infrastructure into the environmental dynamic stochastic general equilibrium model.

Port Competition and Cooperation Under Emission and Privatization

The study considers the competition and cooperation between mixed duopoly ports with service differentiation when both emission tax and partial privatization policies are implemented together. By developing three-game models between government and port enterprises, this paper first studies and compares, under different game scenarios, the optimal emission tax for mixed duopoly ports and privatization level for a semipublic port, as well as the optimal output (or pricing) and emission reduction of semipublic and private ports. Moreover, the profit and utility of the two ports, environment damage, consumer surplus, and social welfare are also compared, and the impacts of technology spillover for emission reduction and service differentiation on the decision-making of the government and port enterprises are discussed. We find that the optimal emission tax under a strategic cooperation scenario can reach a higher level, then the government needs more efforts to protect the environment. In addition, although port cooperation is conducive to maximizing social welfare and increasing port throughput, it harms the profitability of the two ports.