Carbon Tax Rate Research Articles

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

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

Supply chain contract design considering carbon tax policy under demand information asymmetry

AbstractOur paper constructs a low‐carbon supply chain (LSC) with a single manufacturer producing low‐carbon products and a single retailer. Assume that the retailer possesses private demand information and consider two cases: The manufacturer or the retailer determines the low‐carbon product's retail price. By constructing principal‐agent models, we obtain the optimal menu of contracts in each case. The impacts of the carbon tax rate and information asymmetry on LSC members' equilibrium solutions and expected profits are discussed. The results show that, given certain conditions, both the LSC members may obtain more expected profits under information asymmetry by introducing appropriate contracts.

Optimal dynamic strategy for emission reduction and operation considering hybrid carbon policy with carbon tax and cap-and-trade

Global warming has always been a constant concern for various countries, and carbon emissions are one of the main causes. Accordingly, how to reduce emissions is a problem that enterprises need to pay attention to. The enterprise’s emission reduction activities are closely influenced by government policies. This paper analyzes the effect of a hybrid carbon policy, which means a combination of carbon tax and cap-and-trade policies, on the manufacturer’s carbon abatement activities and supply chain operations in such a condition that the government operates free and paid carbon emission quotas. The study adopts a differential game approach to examine the optimal decision of the supply chain members. We compare the optimal strategies in centralized and decentralized scenarios and put forward a coordinated contract to achieve the Pareto improvement. Our study shows that the carbon tax rate, carbon trade price and the proportion of paid quota all positively affect the emission reduction activities of enterprises over time, but negatively impact the corporate profit and social welfare. However, the set of above policies is advantageous to consumer surplus within a certain range. As for the revenue sharing-transfer payment hybrid contract, when its sharing rate increases within a certain range, the enterprise’s carbon abatement and supply chain members’ profits will improve at the same time. The adjustment of the above policies depends on which aspect the government focuses on.

Emission reduction technologies for shipping supply chains under carbon tax with knowledge sharing

In response to the gradually increasing pressures of global climate change, governments and enterprises around the world are taking proactive measures to encourage the shipping industry to reduce emissions. Meanwhile, knowledge sharing plays an important role in uncertain market environment and has a profound impact on the development of emission reduction strategies. This paper constructs a shipping supply chain consisting of the port and liner company, and explores the impact of carbon tax policies on carbon emission reduction technologies. By using the Stackelberg game model, the benefits of port and liner company are compared and analyzed in order to explore the interrelationship between knowledge sharing and the use of emission reduction technologies. The results of the study show that: (1) Under the conditions of different emission reduction technologies, the state of knowledge sharing has a significant impact on carbon emission benefits, and the determination of the optimal reduction technology is affected by both knowledge sharing and carbon tax rate. (2) Although the impact of knowledge sharing on total carbon footprint is not obvious, it can effectively reduce the redundant carbon footprint. (3) The inclusion of consumers’ green preferences and knowledge sharing in the model is conducive to the port and liner company to realize mutual benefits and win-win situation. The findings of this paper provide a reference for the adoption of emission reduction technologies by shipping supply chain stakeholders under market uncertainty.

How environmental regulation imperatives introduce innovation in firm financing choice among selected asian economies

Green resources have gained substantial scholarly, and policy attention over the last few decades, and are considered as an effective phenomenon to resolve rising pollution and energy crises in under-analyzed economies. Therefore, it is crucial to explore the impact of environmental regulation imperatives (carbon tax rate, green energy intensity, and green productivity) on financing priorities (debt financing and equity financing). For this purpose, we use 10 years of data from the non-financial sector of 6 Asian Economies (China, India, Japan, Pakistan, Singapore, and South Korea), by employing a two-step system Generalized Method of Moments (GMM) for analysis purposes. The findings postulate that carbon tax is inversely and significantly associated with equity and debt financing due to over coating of cost. However, green energy intensity has a direct and significant connection with debt and equity financing. It means an increment in green energy sources leads to boost and strengthen the confidence of the stakeholders in investment and lending decisions. Similarly, green productivity directly and significantly affects debt and equity financing. It further means that firms achieving their goals while mitigating environmental impact leads to an improved resource efficiency, cleaning waste and pollution, and apt sustainable operations. In addition, it attracts stakeholder's intentions optimistically while making investing and lending decisions. Moreover, the analysis outputs reveal that this study brings innovation in the firm financing choice while considering environmental impact. This arrangement of variables has never been discussed before in the literature of financial economics and environmental economics.

Technical-economic-environmental analysis of biomass direct and indirect co-firing in pulverized coal boiler in China

An analysis was conducted on two integrated models involving direct co-firing and pyrolysis co-firing systems within a typical 600 MW coal-fired power generation plant. The study assessed the performance of various biomass sources (sawdust, corn straw, and rice husk) using distinct co-firing ratios (5%, 10%, 15%, 20%) across technological, environmental, and economic dimensions. The findings revealed that in terms of thermal and exergy efficiency, the pyrolysis co-firing approach exhibited lower results compared to direct co-firing. Notably, among the biomasses tested, sawdust demonstrated the least impact on boiler efficiency. The CO2 emission was estimated by the Life Cycle Assessment method. The emission of the conventional boiler, along with direct and pyrolysis co-firing of corn straw at a 20% ratio, resulted in CO2 emissions of 1.075 kg, 0.954 kg, and 0.942 kg per 1kWh of electricity, respectively. The different feeding methods were also discussed, providing technically and economically rational options for coal-fired power plants. The economic feasibility of both co-firing systems was also proposed. At carbon tax rates of 410 CNY/t and 464 CNY/t for the direct co-firing and pyrolysis co-firing models respectively, the operational cost of the co-firing systems becomes comparable to that of a coal-fired boiler. However, when the by-product price exceeds 3700 CNY/t, the pyrolysis co-firing model becomes the more economically favorable option. This study primarily concentrates on investigating the real-world application and effective utilization of biomass co-firing systems within the specific framework of China's energy scenario.

Solving carbon tax challenges with a holistic approach: Integrating evolutionary game theory and life cycle energy solutions

Carbon emissions from the combustion of fossil fuels continue to be a significant barrier in the fight against global climate change. Carbon taxes are an energy policy tool for substantially carbon dioxide (CO2) emissions reduction. This paper proposes a new strategy to promote the use of renewable energy by enterprises in industrial parks against the backdrop of a carbon tax. Using an evolutionary game model based on life cycle assessment (LCA), this study investigates the impact of dynamic carbon tax mechanisms, fines, and subsidies on the energy choices of industrial park enterprises. This paper's primary contribution is the incorporation of LCA into the evolutionary game model, which facilitates accurate calculation of the carbon tax parameter value. According to the study's findings, the carbon tax rate increases the propensity of enterprises to acquire a high percentage of renewable energy. While there is a negative relationship between fines and the propensity of enterprises to adopt a low proportion of renewable energy, an increase in subsidies decreases the proportion of enterprises that purchase a high proportion of renewable energy. This paper concludes by providing a theoretical foundation for policymakers to construct precise carbon tax schemes and promote renewable energy consumption among industrial park enterprises while simultaneously reducing carbon emissions.

Pricing and Coordinating the Lease-Oriented Closed-Loop Supply Chain for Construction Machinery in the Era of Carbon Tax

Promoting sustainable production and consumption practices in the construction machinery industry is crucial for achieving energy savings and reducing carbon emissions. However, there is a lack of targeted studies addressing the challenge of scaling up leasing and recycling while maximizing economic benefits for enterprises. To fill this gap, this paper presents a lease-oriented closed-loop supply chain model that incorporates a carbon tax policy to investigate the impact of the carbon tax rate and consumer preferences for remanufactured products on the supply chain and introduces a leasing compensation–cost apportioning combined contract to achieve supply chain coordination in the construction machinery sector. The model considers differential selling and leasing prices for new and remanufactured products, as well as the recovery rate, under both centralized and decentralized decision-making approaches. The study explores the interrelationships between various parameters through sensitivity analysis and numerical simulation. The results demonstrate that within a certain range of the cost apportioning proportional coefficient and leasing compensation proportional coefficient, the combined contract can lead the supply chain to achieve Pareto optimality. As the carbon tax rate increases, it was observed that the profits for all parties in the supply chain tend to decrease. However, due to the increased demand for remanufactured products, the product recovery rate improves, resulting in a reduction in total carbon emissions in the closed-loop supply chain of construction machinery. Moreover, the profits of all parties and the total supply chain profits initially decrease and then increase with an increasing preference coefficient for remanufactured products among consumers. By leveraging these factors and adopting effective strategies, such as enhancing consumer recognition of remanufactured products and optimizing pricing and cost allocation, it is indeed possible for the profits of all parties and the total profits in the supply chain to surpass the initial values, even in the face of increasing carbon tax rates. This demonstrates the potential for aligning sustainability objectives with economic benefits in the construction machinery industry.

How do carbon trading price and carbon tax rate affect power project portfolio investment and carbon emission: An analysis based on uncertainty theory

Responding to the social, economic, and environmental call to resolve current sustainability challenges, the concern about carbon dioxide emission reduction should be incorporated into the power investment decision process. Reflecting the low carbon emission requirement, this paper proposes a new optimization model for power project portfolio selection that simultaneously considers both of carbon emission trading scheme and carbon tax imposition. In this model, the initial investment outlay, the power sale price, the carbon trading price, and carbon tax rate are treated as uncertain variables considering the fast-changing environment and complex market situation. Incorporating the constraint on whether the carbon quota is exceeded into the model, two investment strategies are proposed for investors. Using the proposed model, the impact of the rises in carbon trading price and carbon tax rate on the investor’s investment strategy selection and the carbon emission is simulated and analyzed through a case study. When the expected carbon price is 203.50 RMB/tCO2-eq or less, a company should invest based on the strategy that annual emissions exceed the quota to obtain a maximum expected NPV which is larger than 408588 million RMB. When future carbon prices are 352.00, 500.50 and 649.00 RMB/tCO2-eq, the government should impose carbon tax rates of 30, 30, and 40 RMB/tCO2 on a power company, respectively, to obtain carbon emission reduction effect. At last, to see the contrast effect of the results from simultaneous implementation of both carbon trading and carbon tax, the results considering the carbon trading alone or carbon tax alone are discussed, respectively.

Competitive firms’ low-carbon technology diffusion under pollution regulations: A network-based evolutionary analysis

To investigate the diffusion degree of low-carbon technology in competitive firms and the influence of different pollution regulations, we constructed an evolutionary game model representing three environmental mechanisms: total amount control and trading, carbon tax, and subsidy, within a complex firm network. By analyzing the effects of carbon quotas, tax rates, and subsidy rates, we comprehensively assessed the performance of these mechanisms in terms of diffusion degree, firm profits, consumer surplus, environmental damage, and social welfare. The study results demonstrated distinct outcomes for each environmental mechanism. Under the subsidy mechanism, low-carbon technology exhibited the highest diffusion degree, suggesting its efficacy in promoting widespread adoption. However, it is worth noting that the higher the subsidy, the more environmental pollution it led to, which presents a trade-off between environmental benefits and financial incentives. On the other hand, the carbon tax mechanism resulted in minimal pollution, reflecting its potential as an effective tool for environmental regulation. Finally, the cap-and-trade mechanism emerged as the most favorable option, as it maximized social welfare while effectively addressing environmental concerns.

Quantifying the dynamical interactions between carbon pricing and environmental protection tax in China

China's environmental protection tax (EPT) has been in effect since the beginning of 2018 to combat the country's severe air pollution problems. Meanwhile, carbon tax (CTX) has been identified as the most effective way of climate change mitigation. The combined effects of these two policies, in conjunction to their dynamical interactions, however, have yet been thoroughly studied. Utilizing a multiple-province computable general equilibrium (CGE) model, we compare the effects of EPT and CTX policies solely and jointly in 2030. The results show that the EPT policy has limited impact on energy-related air pollution and CO2 reduction, while the CTX policy effectively targets CO2 emissions from energy combustion processes and provides significant co-benefits in reducing air pollutants. The integration of these two policies enhances emission reduction efficiency, with the CTX policy complementing the EPT policy. Implementing CTX alongside EPT leads to substantial emissions reductions, particularly in high-industrial provinces. However, there are economic implications, as certain provinces may experience GDP losses, emphasizing the importance of equitable burden distribution. Policymakers should carefully evaluate and adjust carbon tax rates to ensure both effectiveness and fairness in achieving environmental goals.

The green-MKS system: A baseline environmental macro-dynamic model

This paper extends the Marx-Keynes-Schumpeter model in Flaschel (2015) to study the social dimension of climate change. Agents are divided between those supporting and those opposing taxing Green House Gas (GHG) emissions. The composition of the population varies according to a continuous-time version of the discrete-choice approach. Conditional to the level of interaction between players, society chooses the respective carbon tax rate. Higher taxes reduce capital accumulation but support the development of energy-saving production techniques. Output growth and employment rates will be higher or lower depending on which effect prevails. Economic activity generates GHG emissions and determines the employment rate, which, in turn, endogenously feedback on environmental sentiments. Lower emissions reinforce sustainable attitudes, while falling employment increases households’ concerns with more “urgent” needs, decreasing support for taxation. Hence, the model is compatible with a positive relationship between environmental attitudes and energy efficiency but not a clear association with output. A sufficiently strong response of attitudes to emissions combined with a “sentiments-autonomous” carbon tax may lead to the disappearance of the equilibrium in which most agents oppose regulation, controlling for multi-stability. Our 3-dimensional system admits endogenous persistent and bounded fluctuations, where the interaction between green attitudes and the macro-economy appears as a novel source of growth-cycle dynamics.

Achieving near-zero carbon dioxide emissions from energy use: The case of Sri Lanka

Signatories to the Paris Agreement are to achieve net zero Green House Gas (GHG) emissions during the half-century to pursue the efforts limiting global average temperature increase by 2 °C compared to pre-industrial levels. This study models ambitious to challenging scenarios involving energy demand and supply side actions for energy system transition toward net-zero for Sri Lanka. To analyze these scenarios a least cost optimization-based bottom-up type energy system model was developed from 2015 to 2050. A Business-as-usual (BAU) scenario and four countermeasure (CM) scenarios termed Plausible, Ambitious, Challenging, and Stringent were developed. Four different carbon tax rates were used to fathom the level of carbon tax needed to achieve net-zero emissions. The CM scenarios were formulated considering different technology options and policy measures such as the diffusion of efficient technologies, availability of renewable energy sources, use of cleaner fuels, the introduction of nuclear and carbon capture and storage technologies, and green hydrogen for power generation. The result of this study reveals that the stringent scenario which includes aggressive policy measures in both the energy supply and demand sectors, such as nuclear, and renewable energy for power generation, diffusion of efficient Enduse devices, fuel switching, including the introduction of electric cars, and increased share for public transport achieves the near carbon-neutral scenario at a carbon tax trajectory of 32 US$/tCO2 in 2020 and 562US$/tCO2 in 2050. The Net Energy Import Dependency (NEID) of the country decreases to 13 % in 2050 compared to that of the BAU scenario (65 %) under the near carbon neutral scenario, which is a positive sign from the energy security perspective.

Using Carbon Tax to Reach the U.S.’s 2050 NDCs Goals—A CGE Model of Firms, Government, and Households

Our study shows how the United States government can achieve its goal of Nationally Determined Contribution (NDC) in 2025, 2030, and 2050 by reducing energy consumption through a pure carbon tax. To achieve its emissions reduction goals, it is necessary for the U.S. to impose a long-term carbon tax that balances taxes on labour, capital, energy, and carbon. Therefore, in this study, through the two-layer CGE Cobb–Douglas model, the carbon tax rate is set while balancing the production and profit functions of government, businesses, and households. This study concludes that the carbon price will increase from USD 0.4391/kg CO2 in 2020 to USD 2.5671/kg CO2 in 2050, when the CO2 emissions reduction target is increased from 17% reduction in 2020 to 83% reduction in 2050 for the U.S.

The Role of Green Accounting Through the Implementation of Carbon Taxes as an Instrument for Climate Change Mitigation in Indonesia

This study aims to analyze the application of green accounting and carbon tax in the context of climate change in Indonesia. The integration of green accounting with carbon taxes is a relevant instrument for reducing greenhouse gas emissions and encouraging companies to shift to cleaner energy sources. The research method is an analysis of the literature related to green accounting and carbon tax in Indonesia. Data and literature were collected to identify green accounting practices in Indonesia, their potential and impact on financial and environmental performance. The results show that several companies have adopted green accounting practices, such as measuring carbon emissions and reporting environmental performance. However, wider and consistent implementation is needed across all sectors. Carbon tax policies in Indonesia are also still in the development stage, with some sectors already subject to carbon taxes. However, there is a need to strengthen the policy framework, including increased clarity on carbon tax rates and the use of revenues from these taxes to support environmental projects. It can be concluded that the application of green accounting and carbon tax in Indonesia is still in its early stages, with several efforts that have been made.
 Keywords: Climate Change, Carbon Tax, Green Accounting

Single or combined tax? A comparative study of the effects of resource and carbon taxes under China's peak emission target

Resource and carbon tax should be taken seriously as typical price control policies to address the dilemma between economic development and carbon emissions in developing countries. Therefore, based on China, we construct a dynamic CGE model to evaluate the carbon emission reduction and economic effects of a single tax policy (resource tax or carbon tax) versus their combination. The simulation results demonstrate that the carbon tax policy is superior to the resource tax-increasing policy under a single tax policy. Specifically, it is hard to meet the autonomous national contribution target of peaking carbon by 2030 only by raising the resource tax, and the economic loss is relatively heavy. The setting of the initial carbon tax will affect the carbon peak time and total carbon emissions. When the initial carbon tax is 25 yuan/tonne, carbon emissions will peak in 2029. A combined tax policy is preferable to a single carbon tax policy. The combination of gradually increasing the carbon tax rate and lowering the resource tax rate can effectively reduce economic losses, achieve a carbon peak and promote the joint development of the environment and economy.

A system dynamics model of port hinterland intermodal transport: A case study of Guangdong-Hong Kong-Macao Greater Bay Area under different carbon taxation policies

The port cluster in the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) is an important network hub. It not only connects domestic and international markets, but also plays a vital role in stimulating the local and global economy. However, the GBA is facing the challenges in its port hinterland intermodal system due to its surging transport demands. The optimization and integration of the two goals of economy and eco-environmental protection must be considered at the same time. This study makes an endeavor to establish a port hinterland intermodal transport System Dynamics (SD) model of the GBA. The simulation results show that the carbon taxation policy is a relatively direct and effective incentive for inducing the modal split of port hinterland intermodal to a greener mode. Under the same carbon tax rate, the emission reduction effect in descending order is Shenzhen Port, Guangzhou Port, and Hong Kong Port, which means Shenzhen Port is the most sensitive to carbon tax rate due to its huge emission reduction potential. To achieve the national emission reduction goal, the carbon tax rate of BGA needs to be set at the medium to high level. Nevertheless, local governments still have to formulate carbon taxation policies based on local conditions.

Estimated model-based robust optimization of closed-loop supply chain under uncertain carbon tax rates and demand

Due to the growing interest in sustainable development, the importance of research on closed-loop supply chain is being emphasized more and more. The main objective of this study is to develop a robust optimization model for a closed-loop supply chain that reflects uncertain demand and the time-series patterns of uncertain carbon tax rates on the basis of historical data. This study incorporates the first-order autoregressive model into a set-based robust optimization model to find a less conservative solution. Two novel uncertainty sets reflecting the time-series pattern using the historical data are proposed and tractable robust counterparts are developed. The results of numerical experiments conducted herein indicate that the optimal solutions of the proposed models are less conservative than those of the conventional robust optimization model, with a slight loss in robustness to the parameter uncertainty. Moreover, according to the experimental results, the stronger the autocorrelation of the uncertain parameter, the greater are the benefits of the proposed models. Furthermore, the smaller the size of the historical data, the higher are the conservatism and robustness of the proposed model. In addition, when the exact support set is known, the proposed model can be less conservative than that when it is not known, but both proposed models outperform the conventional robust optimization model.

Study on Low-Carbon Technology Investment Strategies for High Energy-Consuming Enterprises under the Health Co-Benefits of Carbon Emission Reduction

The excessive use of fossil energy has led to a yearly increase in carbon dioxide and atmospheric pollutant emissions, and climate change has become increasingly prominent, seriously affecting people’s daily lives and physical and mental health. According to statistics, rising temperatures and extreme weather phenomena due to climate change have led to a 68% increase in heat-related deaths today compared to the period between 2000 and 2004, and a 61% increase in the number of days humans face high fire risks in the same period. Currently, in order to achieve synergistic economic and environmental development and enhance the health co-benefits of carbon emission reduction, it is urgent for high-energy-consuming enterprises to make sound low-carbon technology investment decisions. Therefore, in this paper, under the carbon quota and trading policy and carbon tax policy, and considering the existence of low-carbon preferences of consumers, the financial constraints of upstream high energy-consuming enterprises and sufficient funds of downstream retailers, a low-carbon technology investment decision model under intra-supply chain financing is constructed using Stackelberg game theory. Moreover, by applying the inverse induction method, we solve the optimal decision of low-carbon technology investment with three different subsidy methods: no subsidy, cost subsidy and product subsidy. Finally, the validity of the model is verified by numerical simulation, and the effects of different influencing factors on low-carbon technology investment are analyzed. The results show that: (1) the reasonable formulation of carbon trading price, carbon tax rate, cost subsidy ratio and product subsidy coefficient are important factors to promote enterprises’ low-carbon technology investment; (2) the improvement of consumers’ low-carbon preference level and the reduction in repayment interest rate can promote enterprises’ investment; (3) compared with no subsidy, cost subsidy and product subsidy can effectively improve enterprises’ low-carbon technology investment enthusiasm, and the effect of product subsidy is better than that of cost subsidy. The effect of product subsidies is better than that of cost subsidies. This paper aims to provide suggestions for the government to refine low-carbon technology investment incentive policies and for enterprises to optimize low-carbon technology investment decisions, so as to enhance the healthy co-benefits of carbon emission reduction and achieve green and sustainable economic development.

Strategic interactions between product line design and carbon tax regulation

Along with carbon neutrality becoming recognized worldwide as one of the most effective ways to address global climate change and environmental challenges, there have emerged numerous attempts on the optimization of manufacturing and production management when facing carbon regulation. However, the previous literature considers mainly firms selling only single product variants, while consumer products in the real world are often sold in product lines. To gather theoretical guidance to achieve carbon neutrality, it is both necessary and urgent to explore the interactions between product line selling and carbon regulation. This paper analyzes the strategic interactions between product line design and carbon tax regulation. We show that a short product line may weaken policy makers’ incentive for carbon tax regulation if the unit environmental damage of production is sufficiently small. We also show that a longer product line does not necessarily lead to a higher carbon tax rate (CTR) unless the unit environmental damage of production is not sufficiently large. Additionally, we identify the condition under which a firm can have more incentives to extend product line with a predetermined CTR (pre-CTR) than that with a post-determined CTR (post-CTR). That is, unless the product line extension fee is sufficiently large, a firm with a pre-CTR would have more incentives to extend product line than that with a post-CTR when the unit environmental damage is moderate.