How Do Carbon Taxes Affect Emissions? Plant-Level Evidence from Manufacturing

This paper investigates how carbon taxes affect emissions by examining British Columbia's revenue-neutral carbon tax in the manufacturing sector. We theoretically demonstrate that carbon taxes can achieve emission reductions while increasing production. Recycling carbon tax revenues to lower corporate income tax rates encourages investments, allowing plants to emit less per unit of output. Using detailed confidential plant-level data, we evaluate this theoretical prediction by exploiting the treatment intensity through plants' emission intensity. We find that the carbon tax lowers emissions by 4 percent. Furthermore, we find that the policy had a positive output effect and negative emission intensity effect, suggesting that the carbon tax encouraged plants to produce more with less energy. We provide initial evidence showing how a revenue-neutral carbon tax may achieve emission reductions while stimulating the economy.

Carbon tax policy analysis based on distribution channel strategy

This paper establishes a theoretical model to study the carbon tax policy based on a firm's different distribution channel strategy. First, we examine the firm's optimal distribution channel strategies in the absence of government policy intervention. Then, on the assumption that the firm is owned by the society as a whole and taking into account the environmental impact of the firm's decisions, we describe the product distribution strategy that optimizes social welfare. Through the comparison of the above two situations, we find that without the intervention of government policies, the firm's decision may deviate from the decision that optimizes social welfare. Finally, on the basis of the analysis, we propose a carbon tax policy for retailers in distribution channels under different firm distribution strategies. We hope that with the intervention of carbon tax policy, firm decisions can achieve optimal social welfare.

A comparative study of carbon tax and fuel tax based on panel spatial econometric model

The balance between economic development and environmental governance has always been the focus of attention, and this has become a key issue facing in China. In recent years, the means of improving the environment through taxation are common, and it is more in line with China's national conditions. Carbon tax and fuel tax are considered to be effective environmental supervision measures, and the implementation of this policy is bound to have a critical impact on the advance of economic level. However, the implementation effects of these two mechanisms may be different, and they may also have various effects on regional development. Therefore, based on the panel data of China's 29 provinces from 2008 to 2018, we adopt the spatial autocorrelation method to explore the relationship between the economic levels of various areas. Then, establishing the panel spatial econometric model of economic growth and carbon tax, economic growth and fuel tax respectively to compare the implementation effects of the two tax policies. It turns out that there is a positive correlation between the economic growth of 29 provinces in China. And whether choosing to levy carbon tax or fuel tax, they all have their own advantages and disadvantages. Finally, according to the results of empirical analysis results, some relevant policy suggestions are put forward.

Optimal tax selection under monopoly: emission tax vs carbon tax

Both carbon and emission taxes popularly exist all over the world. Therefore, it is important to compare carbon with emission tax. Under monopolization, this article establishes game theory model to compare carbon with emission tax. On one hand, both carbon and emission taxes reduce energy inputs, outputs, profits, and emission. On the other hand, under optimal taxes, two types of taxes affect identically. Under incomplete information carbon taxes seem more efficient than emission taxes. Based on these conclusions, we suggest to launch environmental tax based on emission function. Or the selection of taxes should consider the emission properties in production.

A carbon tax or a subsidy? Policy choice when a green firm competes with a high carbon emitter

Choosing pollution control instrument is an important environmental policy decision. Carbon taxes and subsidies for emissions reductions are two commonly used environmental policies. In practice, the government may be restricted to use only one policy instrument. In this paper, we compare the social welfare effect between policies of a carbon tax and a subsidy. We show that as the marginal environmental damage of the high carbon product increases, the control instrument should change from a subsidy policy to a carbon tax policy. It also turns out that Bertrand competition does not always incur a higher social welfare than Cournot competition when the government intervenes with a pollution control policy.

Mean Field Models to Regulate Carbon Emissions in Electricity Production

The most serious threat to ecosystems is the global climate change fueled by the uncontrolled increase in carbon emissions. In this project, we use mean field control and mean field game models to analyze and inform the decisions of electricity producers on how much renewable sources of production ought to be used in the presence of a carbon tax. The trade-off between higher revenues from production and the negative externality of carbon emissions is quantified for each producer who needs to balance in real time reliance on reliable but polluting (fossil fuel) thermal power stations versus investing in and depending upon clean production from uncertain wind and solar technologies. We compare the impacts of these decisions in two different scenarios: (1) the producers are competitive and hopefully reach a Nash equilibrium; (2) they cooperate and reach a social optimum. In the model, the producers have both time dependent and independent controls. We first propose nonstandard forward-backward stochastic differential equation systems that characterize the Nash equilibrium and the social optimum. Then, we prove that both problems have a unique solution using these equations. We then illustrate with numerical experiments the producers' behavior in each scenario. We further introduce and analyze the impact of a regulator in control of the carbon tax policy, and we study the resulting Stackelberg equilibrium with the field of producers.

Carbon tax and energy innovation at crossroads of carbon neutrality: Designing a sustainable decarbonization policy

Decarbonation has been a primary policy prerogative for Sweden, and carbon tax has been a primary policy instrument in this pursuit, and the revenue generated out of carbon tax has been a driver for energy innovation. However, the benefits of energy innovation have not been experienced across various sectors in Swedish economy, and it might be anticipated that the potential aim of achieving carbon neutrality might not be accomplished to the fullest. Hence, being faced with the need of policy realignment for Sweden, this study has made an attempt to discover the dynamics between carbon tax revenue and energy innovation over a period of 1990-2019, following Quantile-on-Quantile Regression framework. The results obtained from the study show that the impact of carbon tax revenue on energy innovation might turn out to be ineffective beyond a certain threshold limit. A similar pattern has also been observed for the impact of energy innovation on carbon tax revenue. This study gives an indication that there might be a non-linear association between both these model parameters. The study outcomes have paved a way to design a policy framework for helping Swedish economy to attain the objectives of Sustainable Development Goals, while paving the ways to achieve carbon neutrality.

A systems approach to carbon policy for fruit supply chains: Carbon tax, technology innovation, or land sparing?

Reducing carbon emissions of food supply chains has increasingly received attention from businesses and policymakers. In order to propose sound policies aimed at lowering such emissions, policy makers favor tools that are informative in the economic and environmental dimensions simultaneously. In this study we offer a systems-based approach which is intended to do just that by developing a spatially and temporally disaggregated price equilibrium mathematical model for a food production and distribution system and applying it to the U.S. apple supply chain. We considered three emission reduction interventions: a carbon tax, a land-sparing incentive, and new emission-reduction technologies. We find that R&D which leads to storage technologies with lower carbon emission rates has the greatest potential for emission reduction. Carbon taxes also has the potential to reduce emissions, but at the cost of decreasing apple production and increasing consumer price. These results are unexpected and important, particularly since several countries are implementing carbon taxes and/or land sparing/sharing strategies.

Impact of energy structure on carbon emission and economy of China in the scenario of carbon taxation

As the largest CO₂ emitter in the world, China intends to achieve the peak of carbon emissions in around 2030. Unlike many other countries' targets of reducing the amount the carbon emissions, China has engaged in achieving the goal of carbon emission intensity regulation including economic development and carbon emission reduction. In recent years, carbon tax policy has been implemented by about 30 national and sub-national jurisdictions in controlling carbon emissions and has shown promising results. In this context, this research evaluates whether the carbon tax is an effective way for China to accomplish the win-win target of carbon reduction and GDP growth. Specifically, a model is established based on the energy substitution theory and input-output theory to evaluate the effectiveness of carbon tax on the eight economic sectors of China. The carbon emission reduction and economic performance before and after carbon taxation are compared. Moreover, the effects of different carbon tax rates on economic development are analyzed. The results are as follows: (1) The total amount of carbon emission decreases while the carbon tax is levied, and a positive correlation is found between the tax rate and the emission reduction amount. (2) The carbon tax has a significant impact on economic development, and a negative correlation is found between the tax rate and economic development. However, the loss of the economic output caused by the carbon tax gradually reduces over time. (3) Carbon tax policy would be effective for China to accomplish the win-win goal of carbon reduction and GDP growth. Moreover, the carbon tax rate should be set at a low level to achieve the target by the lowest economic cost. On this basis, several policy recommendations are proposed by this research.

CGE modeling with disaggregated pollution treatment sectors for assessing China's environmental tax policies

This research involved constructing a computable general equilibrium (CGE) model for assessing China's latest environmental tax policies. Most environmental CGE models link pollutant emissions to the standard CGE model only by pollution coefficients per unit of sectoral output, and the emission reduction process is not included within production structures. We constructed separate pollution treatment sectors for solid waste management, wastewater management, and waste gas management to describe the pollution treatment processes and identify how policies affect production activities. We compiled the satellite accounts of 18 pollutants from the China Environmentally Extended Input-Output (CEEIO) dataset covering primary gas, water, and solid pollutants and disaggregated the electricity sector into six different production technologies: hydroelectricity, coal power, gas electricity, oil electricity, nuclear power, and renewable energies. We drew two primary conclusions from the simulation results. First, the environmental policies examined could help reduce the emissions of most kinds of pollutants, but also negatively affect GDP. GDP loss by 2030 would be 0.03% in the low environmental tax scenario (LowET), 0.06% in the high environmental tax scenario (HighET), 0.16% in the low environmental tax and low carbon tax scenario (LowETC), and 0.34% in the high environmental tax and high carbon tax scenario (HighETC). SO₂ emissions would decrease by 17.4%, 21.0%, 19.3% and 24.5%, respectively, and CO₂ emissions would reduce by 0.9%, 1.7%, 5.8% and 11.0%. Second, despite the minor changes in the economic impacts, the effectiveness in pollution treatment of environmental tax policies is underestimated if the pollution treatment sectors are disaggregated in the CGE model. Take the SO₂ for an example. The calculated SO₂ reductions will increase from 8.95% to 24.46% after disaggregating the pollution treatment sectors in HighETC scenarios.

Indirect effects of carbon taxes on water conservation: A water footprint analysis for China

Water scarcity is a severe problem for regional environmental protection and socioeconomic development, and water footprints are effective tools for evaluating the magnitude of the water scarcity. However, water is closely intertwined with energy. Carbon taxes are an essential policy tool for managing energy use, and could therefore indirectly change the water footprint. Previous research on water footprints has revealed the historical characteristics of water footprints, but has not predicted how these characteristics would change under a carbon tax. Identifying the indirect impacts of carbon taxes on water footprints could therefore offer important information to support more effective energy and water policies. In the present study, we explored the impacts of carbon taxes on water footprints. We established a computable general equilibrium model to predict the effects of carbon taxes on the socioeconomic system, and adopted an input-output model to account for changes in the water footprint. We then used China as a case study. We found that a carbon tax could reduce the total water footprint, even though the water footprint for primary industries increased. In addition, the tax could decrease the virtual water content, and the reduction of virtual water content is the greatest for the secondary industries.

A Moment of Intersecting Crises: Climate Justice in the Era of Coronavirus

The author explores the nexus of ‘climate chaos’ and how this intersects with and exacerbates the top issues of our time—from immigration to public health to mass incarceration. She challenges us to think about the implications of these intersections for social justice and why policy makers need to stop considering the climate emergency as a siloed issue. Climate policy needs to be framed and rethought in an intersectional manner that centers equity, justice, and the creation of jobs.

Sustainable dynamic lot sizing models for cold products under carbon cap policy

Amid the ever growing interest in operational supply chain models that incorporate environmental aspects as an integral part of the decision making process, this paper addresses the dynamic lot sizing problem of a cold product while accounting for carbon emissions generated during temperature-controlled storage and transportation activities. We present two mixed integer programming models to tackle the two cases where the carbon cap is imposed over the whole planning horizon versus the more stringent version of a cap per period. For the first model, a Lagrangian relaxation approach is proposed which provides a mean for comparing the operational cost and carbon footprint performance of the carbon tax and the carbon cap policies. Subsequently, a Bisection based algorithm is developed to solve the relaxed model and generate the optimal ordering policy. The second model, however, is solved via a dynamic programming based algorithm while respecting two established lower and upper bounds on the periodic carbon cap. The results of the computational experiments for the first model display a stepwise increase (decrease) in the total carbon emissions (operational cost) as the preset cap value is increased. A similar behavior is also observed for the second model with the exception that paradoxical increases in the total emissions are sometimes realized with slightly tighter values of the periodic cap.

SVR-DEA model of carbon tax pricing for China's thermal power industry

To mitigate the adverse effects of global climate change, the carbon tax has been gradually recognized as an important economic means to reduce carbon emissions. This paper therefore aimed to investigate the carbon tax pricing for China's thermal power industry and proposed a provincial increasing block carbon tax (IBCT) policy. By designing a forecast-optimized framework with support vector regression (SVR) and data envelopment analysis (DEA), the pricings of IBCT and flat carbon tax (FCT) were calculated. Meanwhile, the effects of both them on emission reduction were compared. The results showed that: (1) China's overall electricity demand will continue to increase in 2020, with southern and northern provinces showing stronger increases than other provinces. (2) The marginal abatement cost of each region was calculated, thus gaining an optimal three-stage form of IBCT. (3) The comparison indicated that the emission reduction efficiency of the IBCT was 23.1% higher than the FCT under the premise of equal emission reduction. The study suggests that IBCT is a more efficient type of carbon tax policy compared to FCT. Implementing IBCT can be conducive to achieving the dual goals of reducing cost burden and carbon emission in China's thermal power industry.

Employing the CGE model to analyze the impact of carbon tax revenue recycling schemes on employment in coal resource-based areas: Evidence from Shanxi

Whether or not the carbon tax is conducive to alleviating the pressure on employment reduction in coal resource-based areas is a subject worthy of in-depth study. We take the province of Shanxi, a typical coal resource-based area in China, as an example, and use the dynamic computable general equilibrium (CGE) model to simulate the impact of carbon tax on employment under various carbon tax revenue recycling schemes. We disaggregate the employment effect into demand effect, cost effect, factor-shift effect, and investment-pull effect to analyze the transmission path of the influence of carbon tax on employment. The results show that the carbon tax is conducive to alleviating the pressures on employment reduction in coal resource-based areas. Compared with the scenario of no carbon tax revenue recycling, the pressures on employment reduction under the scenario where carbon tax is returned to residents or enterprises in different forms, are allayed. More into detail, carbon tax has the least inhibiting effect on industry employment in case that tax revenue is returned to residents in the form of transfer payment. In addition, there is a prominent difference in the transmission path through which the carbon tax promotes employment, that is, the single effect, or the combination of demand effect, cost effect, factor-shift effect, and investment-pull effect. However, the carbon tax would obstruct employment principally through the demand effect.

The influence of carbon tax on the ecological efficiency of China's energy intensive industries-A inter-fuel and inter-factor substitution perspective

China's energy intensive industries have posed great challenges in achieving carbon emissions reduction goals. We calculate the influence of carbon tax levying on the CO₂ emissions as well as ecological efficiency of China's energy intensive industries utilizing inter-fuel and inter-factor substitution channel. To allow for the slow adjustment process of the enterprises of different fuels and factors inputs, a dynamic model and three-stage estimation procedure are used. Based on the substitution among fuels and factors, the results indicate that carbon tax levying will make the enterprises transform from consuming coal (with a higher carbon efficient) to lower oil/gas and electricity, and from inputting energy to inputting more labor and capital. Therefore, carbon tax is conductive for the CO₂ reduction in China's energy intensive industries. With regard to the two kinds of ecological efficiency, carbon tax plays a negative role in improving them. Thus, carbon tax levy is suggested to reduce the carbon dioxide emissions in China's energy intensive industries. The future assessment tasks should include the ecological efficiency in to make the assessment more reasonable.

Data set and model code on the optimal operating state of a negative emission polygeneration system

This article contains the data set and model code for the negative emission polygeneration system described in Tan et al. (2019). The data was generated utilizing an optimization model implemented in LINGO 18.0 and includes information on the operating state of each process unit in the system. The maximum annual profit of the system was determined at different carbon footprint targets. The data set and model code can be utilized for further analysis on the interdependence between the process units of this polygeneration system, its operational and environmental performance, and the potential impact of integrating new process units into the network.

Evaluating the performance of carbon tax on green technology: evidence from India

Introduction of carbon tax and the resulting National Clean Energy and Environment Fund are seen as important policy reforms in India's quest for achieving energy security and reducing the carbon intensity of energy. This study seeks to evaluate the impact of carbon tax on R&D in energy efficient technologies. To carry out the analysis, the study employed the difference-in-difference technique for the period 2005-2017. The results highlighted that there are less chances of achieving a 'Double Dividend Hypothesis' for carbon tax in India. Except the renewable energy sector, the support initiatives for enhancing energy efficiency have been rather limited and the government's own revenue considerations seem to be dominating. The study holds that the NCEEF should be insulated from the vagaries of fiscal politics and that a strong reformation in guidelines, utilisation and allocation patterns is required to optimally realise the potential of the fund.

Assessing Short-Term and Long-Term Economic and Environmental Effects of the COVID-19 Crisis in France

In response to the COVID-19 health crisis, the French government has imposed drastic lockdown measures for a period of 55 days. This paper provides a quantitative assessment of the economic and environmental impacts of these measures in the short and long term. We use a Computable General Equilibrium model designed to assess environmental and energy policies impacts at the macroeconomic and sectoral levels. We find that the lockdown has led to a significant decrease in economic output of 5% of GDP, but a positive environmental impact with a 6.6% reduction in CO₂ emissions in 2020. Both decreases are temporary: economic and environmental indicators return to their baseline trajectory after a few years. CO₂ emissions even end up significantly higher after the COVID-19 crisis when we account for persistently low oil prices. We then investigate whether implementing carbon pricing can still yield positive macroeconomic dividends in the post-COVID recovery. We find that implementing ambitious carbon pricing speeds up economic recovery while significantly reducing CO₂ emissions. By maintaining high fossil fuel prices, carbon taxation reduces the imports of fossil energy and stimulates energy efficiency investments while the full redistribution of tax proceeds does not hamper the recovery.

Tackling the chronic disease burden: are there co-benefits from climate policy measures?

Each year, non-communicable diseases (NCDs) kill 40 million people worldwide and impose an estimated economic burden of $600 billion. Without effective policymaking, NCDs will continue to undermine health and economic systems globally. We propose that climate policy measures-such as carbon pricing-can yield significant health-related co-benefits aside from their intended greenhouse gas emission reduction. We simulate three carbon tax scenarios in the energy and food sector in Belgium and assess the resulting health-related co-benefits. These benefits originate from decreased exposure to two leading NCD risk factors: fine particulate matter and dietary regimes excessive in animal products. The carbon tax could prevent 42,300-78,800 Disability-Adjusted Life Years in Belgium, or save 0.6-1.1% of total health care expenditure and an additional 0.06-0.12% of Belgian GDP. We conclude that these health-related co-benefits should be included in the cost-benefit analysis of carbon pricing.

Competing actors in the climate change arena in Mexico: A network analysis

This paper analyzes the actors in the climate change arena and their influence in directing Mexico toward policies that decrease greenhouse gas emissions, such as the carbon tax and climate change law. The network analysis of the agreement of these laws and public policies in Mexico is a lesson for any country that is in the process of designing and adopting environmental laws. The research is performed using a network analysis that is derived from interviews with various main actors and a discourse analysis of the media. Results show that actors do not coordinate their efforts-they meet frequently but in different inter-ministerial commissions-and do not enforce the same policies. The actors in the industry have formed strong coalitions against the carbon tax and the General Law on Climate Change, whereas international institutions have formed coalitions that support these policies and laws.

Tripartite equilibrium strategy for a carbon tax setting problem in air passenger transport

Carbon emissions in air passenger transport have become increasing serious with the rapidly development of aviation industry. Combined with a tripartite equilibrium strategy, this paper proposes a multi-level multi-objective model for an air passenger transport carbon tax setting problem (CTSP) among an international organization, an airline and passengers with the fuzzy uncertainty. The proposed model is simplified to an equivalent crisp model by a weighted sum procedure and a Karush-Kuhn-Tucker (KKT) transformation method. To solve the equivalent crisp model, a fuzzy logic controlled genetic algorithm with entropy-Bolitzmann selection (FLC-GA with EBS) is designed as an integrated solution method. Then, a numerical example is provided to demonstrate the practicality and efficiency of the optimization method. Results show that the cap tax mechanism is an important part of air passenger trans'port carbon emission mitigation and thus, it should be effectively applied to air passenger transport. These results also indicate that the proposed method can provide efficient ways of mitigating carbon emissions for air passenger transport, and therefore assist decision makers in formulating relevant strategies under multiple scenarios.

OVERVIEW OF THE EMF 32 STUDY ON U.S. CARBON TAX SCENARIOS

The Energy Modeling Forum (EMF) 32 study on carbon tax scenarios analyzed a set of illustrative policies in the United States that place an economy-wide tax on fossil-fuel-related carbon dioxide (CO2) emissions, a carbon tax for short. Eleven modeling teams ran these stylized scenarios, which vary by the initial carbon tax rate, the rate at which the tax escalates over time, and the use of the revenues. Modelers reported their results for the effects of the policies, relative to a reference scenario that does not include a carbon tax, on emissions, economic activity, and outcomes within the U.S. energy system. This paper explains the scenario design, presents an overview of the results, and compares results from the participating models. In particular, we compare various outcomes across the models, such as emissions, revenue, gross domestic product, sectoral impacts, and welfare.

Employing a CGE model in analysing the environmental and economy-wide impacts of CO2 emission abatement policies in Malaysia

The impact of global warming has received much international attention in recent decades. To meet climate-change mitigation targets, environmental policy instruments have been designed to transform the way goods and services are produced as well as alter consumption patterns. The government of Malaysia is strongly committed to reducing CO₂ gas emissions as a proportion of GDP by 40% from 2005 levels by the year 2020. This study evaluates the economy-wide impacts of implementing two different types of CO₂ emission abatement policies in Malaysia using market-based (imposing a carbon tax) and command-and-control mechanism (sectoral emission standards). The policy simulations conducted involve the removal of the subsidy on petroleum products by the government. A carbon emission tax in conjunction with the revenue neutrality assumption is seen to be more effective than a command-and-control policy as it provides a double dividend. This is apparent as changes in consumption patterns lead to welfare enhancements while contributing to reductions in CO₂ emissions. The simulation results show that the production of renewable energies is stepped up when the imposition of carbon tax and removal of the subsidy is augmented by revenue recycling. This study provides an economy-wide assessment that compares two important tools for assisting environment policy makers evaluate carbon emission abatement initiatives in Malaysia.

A warmer policy for a colder climate: Can China both reduce poverty and cap carbon emissions?

Reducing global carbon dioxide (CO2) emissions is often thought to be at odds with economic growth and poverty reduction. Using an integrated assessment modeling approach, we find that China can cap CO2 emissions at 2015 level while sustaining economic growth and reducing the urban-rural income gap by a third by 2030. As a result, the Chinese economy becomes less dependent on exports and investments, as household consumption emerges as a driver behind economic growth, in line with current policy priorities. The resulting accumulated greenhouse gas emissions reduction 2016-2030 is about 60billionton (60Mg) CO2e. A CO2 tax combined with income re-distribution initially leads to a modest warming due to reduction in sulfur dioxide (SO2) emissions. However, the net effect is eventually cooling when the effect of reduced CO2 emissions dominates due to the long-lasting climate response of CO2. The net reduction in global temperature for the remaining part of this century is about 0.03±0.02°C, corresponding in magnitude to the cooling from avoiding one year of global CO2 emissions.