On December 29, 2017, China's Carbon Trading Scheme (ETS) was officially launched, and it may be the largest emission trading platform in the world. This paper establishes 5 counter-measured ...scenarios based on the recently launched China's national ETS market and constructs a dynamic recursive Computable General Equilibrium model to study the impact of national ETS on the economy, energy, and environment. We find that the national ETS will have a negative impact on GDP by 0.19%–1.44%. The national ETS can significantly increase the price of electricity, however, the increase in the prices of other commodities will be much lower than that of electricity. As long as the mechanism of the ETS market remains unchanged, emission reduction per year will increase linearly. Economic output and CO2 emission are sensitive to Annual Decline factor (ADF). This paper argues that China's national ETS market is an effective tool to reduce CO2 emission, and we suggest that ADF could be 0.5% when allocating carbon allowance for the electricity sector. This could balance economic output and CO2 reduction. Also, it is easy to achieve the goal of “double control” (total amount and intensity) in China.
•China's national ETS can significantly increase the price of electricity.•The emission reduction effect of China's national ETS will be very significant.•China's carbon intensity goal will be easily attained with a national ETS.•Carbon trading market can enable China to achieve the goal of “double control”.
In a world with diverging emission reduction targets, national climate policies might be ineffective in reducing consumption-based CO2 emissions (carbon footprints), i.e. emissions of final demand ...that are embodied across the whole supply chain, including international fractions. We analyse a set of different policies in three areas with particularly high consumption-based emissions in Austria: building construction, public health, and transport. To capture the substitution possibilities triggered by these policies and the induced emission reductions along the full global supply chain, our analysis combines a Computable General Equilibrium with a Multi-Regional Input-Output model. For construction of buildings we find that a carbon added tax is highly effective in reducing consumption-based emissions whereas an information obligation on vacant dwellings combined with a penalty payment when vacant buildings are not made available is ineffective because of reallocated investment capital. Mandatory energy efficiency improvements in public health and mobility are found equally effective in reducing consumption- and production-based emissions while a decarbonization of freight transport logistics stronger reduces production-based emissions. Overall, the effectiveness of policies, to mitigate consumption-based emissions, is therefore determined by the backward and forward linkages of the sector addressed by the policy as well as the substitution effects within final demand.
The computable general equilibrium (CGE) model is a good instrument for counterfactual analysis. This kind of model is widely used in energy and environmental economics. However, the CGE models used ...in different studies vary greatly. As the construction of the model is a massive project, and some model settings may be wrong, it is easy to get unreasonable equilibrium solutions. Another, the code and data of most CGE models are not transparent. This paper aims to break the barrier of the CGE model criticized as “black box” and provide researchers with a CGE model with available code and data: China Energy-Environment-Economic Analysis 2.0 (CEEEA2.0) model. Taking carbon tax and energy tax as examples, this paper analyzes the impact of carbon neutrality constraints on China from 2018 to 2060. Compared with the traditional CGE model, this paper describes energy and carbon emissions more closely, couples the environmental cost into the model more scientifically and the embodied carbon emissions in trade, and provides novel counterfactual analysis strategies. In addition, this paper introduces how to extend and adjust the model to facilitate the majority of modelers to build a CGE model according to different needs.
•China Energy-Environment-Economic Analysis 2.0 (CEEEA2.0) model with data and code.•A dynamic recursive CGE model embodied carbon emissions is presented.•Enterprises' response to energy policies has been better simulated.
This paper applies a computable general equilibrium model to investigate the impacts of a carbon tax on China's economy and carbon emissions based on China's 2010 Input–Output Table. To obtain robust ...simulation results, we further disaggregate the energy sectors into eight departments according to energy use characteristics. The empirical results indicate that a moderate carbon tax would significantly reduce carbon emissions and fossil fuel energy consumption and slightly reduce the pace of economic growth. However, a large carbon tax has a significantly negative impact on China's economy and social welfare. Moreover, a large carbon tax would entail marked price changes in China. Of the fossil fuels in use, reducing coal consumption would have the greatest impact on reducing carbon emissions, and the ad valorem duty rate for coal would be the highest after levying a carbon tax because it has the highest carbon emission coefficient. Therefore, China should strive to promote clean coal technology, which may be crucial to reducing carbon emissions. Moreover, levying a carbon tax would improve the use of clean energy, which would be an effective means of reducing carbon emissions. Therefore, the Chinese government should formulate the regulations for and pass a carbon tax as early as possible to achieve its carbon emission abatement target and further contribute to mitigating climate change.
•Restructuring the industry sectors to get a robust simulation results.•Simulating the carbon tax's impacts on China economy by using CGE model.•A moderate rate of carbon tax is an effective policy alternative for China.•Levying carbon tax has significant impacts on carbon emission reduction.
Unlike the U.S., Europe was a hotbed for general-equilibrium models with rationing (GEMR). Our goal is to explain how and why GEMR became a “European specialty” (Portes, 1987: p. 1332). We show how ...research on GEMR took off and developed in France and Belgium from the mid-1970s, before expanding all around Europe. We also argue that three main factors enabled the deployment of GEMR in Europe over the 1970s and 1980s. First, GEMR opened up research opportunities in areas in which European economists had specific interests (e.g., general equilibrium theory). Second, GEMR benefited from the support of some leading academic figures who mobilized institutional resources to keep stimulating research over years (e.g., Jacques Drèze, at the Center for Operations Research and Econometrics). Third, there were problems specific to the Old Continent that stimulated research on GEMR, namely persistent unemployment in Western Europe and planning in Eastern Europe.
Drained peatland currently contributes 7.5% of Germany's total national greenhouse gas emissions. The National Peatland Protection Strategy adopted by the German government in 2022 recognizes that ...these emissions need to be reduced significantly to meet the country's climate change mitigation commitments. The present study employs a global dynamic computable general equilibrium model to assess the economic and greenhouse gas emission impacts of alternative agriculture-focused peatland rewetting scenarios for Germany up to 2030. In contrast to partial-analytic approaches, the global general equilibrium approach allows to take consistent account of economic ripple-on effects and carbon leakage effects triggered by peatland rewetting. The results suggest that in the medium term towards 2030 a reduction in annual emissions from agricultural peatland use by up to 45% are attainable at marginal private abatement costs between 27 and 61 Euro/tCO2e. Carbon leakage effects due to induced indirect land use change in Germany and the rest of the European Union reduce the global net emission reduction impact by 0.7 to 1.0% of the direct emission reduction. The effects on food prices remain small in all scenarios. In conclusion, a sizable reduction of Germany's land-use-related emissions is achievable at a low macroeconomic cost by moving beyond the moderate ambitions of the National Peatland Restoration Strategy.
Computable general equilibrium (CGE) modelling is a flexible and open way to model the economic systems that allow practitioners to assess the impacts of different policies or external shocks over an ...economic system. There is some empirical literature dedicated to test the double dividend hypothesis of an environmental tax reform using CGE models. This hypothesis claims that is possible to obtain an improvement of both environmental and economic conditions by imposing an environmental tax and recycling revenues obtained to reduce other pre-existing taxes. This research provides a comprehensive review of this literature including a statistical and a meta-regression analysis. 69 different simulations from 40 studies have been analyzed. 55% of simulations have achieved a double dividend, concluding that although the environmental dividend is almost always achieved, the economic dividend still remains an ambiguous question that needs further research.
As part of its ambitious European Green Deal package, which aims to accelerate the EU's transition to climate neutrality, the European Commission has proposed a “carbon border adjustment mechanism” ...to address the risk of carbon leakage. In order to evaluate the effectiveness of the measure, this study models and compares three versions of a carbon border adjustment in a Computable General Equilibrium framework. The analysis shows that the Commission's proposal, which does not cover indirect emissions and is limited to imports, would reduce carbon leakage to a similar extent (by around one third) as the current free allocation system, which it would replace. However, it would generate substantial revenues (of up to 32 bn USD annually) that could be used to support low-carbon innovation and international climate finance. The analysis also shows that alternative versions of the carbon border adjustment, which would cover indirect emissions and grant export rebates on carbon costs, would further increase the measure's effectiveness; but that these gains should be weighed against the legal and political risks incurred.
•Model-based simulation of the effect of an EU carbon border adjustment (CBA).•The carbon leakage rate is reduced from 22% to between 7 and 15%.•The CBA also has benefits for energy-intensive industries and government revenues.•Carbon leakage cannot be reduced to zero even by the most comprehensive CBA.
•Transport CBAs assume perfect markets or use ad-hoc methods to calculate WEIs.•CGE models can estimate all direct and indirect impacts and their distribution.•CGE models have been developed in ...urban, regional and environmental economics.•There are theoretical and practical barriers to their implementation in transport.
In the transport planning process, decision makers require reliable and informative appraisals to facilitate comparisons and determine if a proposal is worthwhile to society. The cost–benefit analysis is the most common form of appraisal, where benefits are primarily measured from the change in consumer surplus in the transport market. However, these benefits will only reflect maximum social welfare if markets operate perfectly competitively and without any market failures. There may be significant uncaptured impacts, known as wider economic impacts, which agencies are beginning to incorporate in appraisals using ad-hoc methods. Computable general equilibrium (CGE) models are an increasingly popular method for assessing the economic impact of transport, including both direct and wider economic impacts, as they can determine the distribution of impacts among every market and agent in the economy by simulating the behaviour of households, firms and others from microeconomic first principles. Aside from their traditional role estimating changes in macroeconomic variables, CGE models can provide a measure of welfare that guarantees no double counting and accounts for nth order effects. This paper reviews the full range of CGE models that have been applied to transport issues and discusses their role in transport appraisal. CGE models for transport have been developed in urban, regional and environmental economics as well as other fields, and each field has applied its own theory, assumptions and practices to represent the relationships between transport and the economy relevant to the field. This paper also discusses the general role of CGE modelling in transport appraisal, as well as theoretical and practical concerns regarding CGE modelling practice.
In this paper a Computable General Equilibrium (CGE) model was used to assess the coal cess and technological progress in emerging energy technologies to achieve about 40% electric power generation ...from non-fossil fuel based energy resources by 2030 in India. To our knowledge there is no other study that has analysed the interactions between regulatory policies, such as the coal cess, and technological progress in low carbon technologies, including carbon capture and storage (CCS), for achieving a target. The main conclusions emerging from the analysis are – first, endogenous technological change in renewables under current level of carbon pricing (coal cess) can help to achieve the low carbon target along with economic gains; second, the coal cess can facilitate the shift towards a low carbon economy by decreasing the relative prices of non-fossil fuel energy and being a source of finance for supporting R&D in renewables; and finally, advances in carbon capture and storage (CCS) technology can help to achieve CO2 emission reduction at a lower economic cost. Thus, besides technology and fund transfers from advanced economies, policy focus on R&D in energy technologies and carbon pricing are required to take Indian economy on a low carbon growth path.
•Access to energy technologies can facilitate India's renewable energy transition.•High carbon pricing can help energy transition with less CO2 emissions but worsening income distribution.•Advances in CCS technology can help to achieve CO2 emission reduction at a lower economic cost for a coal rich India.•Endogenous technological changes in renewables, if adequate, can aid GDP growth and reduction in income inequality.
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