Impacts of emission trading scheme on technological progress: A case study in China

Despite its significant role in mitigating climate change, technology was usually exogenously treated in evaluating climate policy, particularly emission trading scheme (ETS); such treatment cannot comprehensively reveal how ETS affects technological progress. To narrow this research gap, we attempt to endogenize ETS-induced technological change in this paper. A dynamic recursive Computable General Equilibrium (CGE) model is employed to quantify ETS-induced progress of clean technology (PCT) and efficiency improvement. The Chinese nationwide ETS is taken as a case study. The CGE model results show that PCT negatively affects anthropogenic emissions, while efficiency improvement decreases GDP loss or abatement cost. Simultaneously considering both technological progress increases emission abatement but slightly decreases GDP in the long term. The most interesting finding is that PCT moderates the relationship between efficiency improvement and emission abatement. Hence, PCT is crucial in emission abatement and economic growth under climate policy.

The impact of China's high-speed rail investment on regional economy and air pollution emissions

The high-speed rail (HSR) network in China has experienced rapid development since the 2000s. In 2016, the State Council of the People's Republic of China issued a revised version of the "Mid- and Long-term Railway Network Plan", detailing the expansion of the railway network and construction of an HSR system. In the future, the HSR construction efforts in China will further increase, which is considered to impact regional development and air pollutant emissions. Therefore, in this paper, we apply a transportation network-multiregional computable general equilibrium (CGE) model to estimate the dynamic effects of HSR projects on economic growth, regional disparities, and air pollutant emissions in China. The results indicate that HSR system improvement could generate a positive economic impact but could also increase emissions. The gross domestic product (GDP) growth per unit investment cost stimulated by HSR investment is found to be the largest in eastern China but the smallest in the northwest regions. Conversely, HSR investment in Northwest China contributes to a substantial reduction in regional disparities in terms of the GDP per capita. In regard to air pollution emissions, HSR construction in South-Central China results in the largest increase in CO₂ and NO_X emissions, while for CO, SO₂, and fine particulate matter (PM_2.5) emissions, the largest increase occurs due to HSR construction in Northwest China. At the regional level, the provinces with large changes in accessibility also experience large changes in their air pollutant emissions.

Impacts of the population ageing on the effects of the nationwide emission trading scheme in China

Nowadays, population ageing is a common social phenomenon that occurs worldwide. Rapid ageing may have profound socioeconomic impacts, and thus it may influence effects of climate policy. Nevertheless, very few previous researchers have evaluated climate policy in an ageing society. In this paper, we attempt to narrow the research gap by incorporating ageing impact in climate policy evaluation. Specifically, we have modeled ageing impacts on labor supply, household electricity consumption, and health expenditure. The core of the research framework in this paper is a dynamic recursive Computable General Equilibrium (CGE) model. The model results show that population ageing tends to decrease private health expenditure but increase governmental health expenditure. In contrast, Emission Trading Scheme (ETS) decreases both private and governmental health expenditure. Both population ageing and ETS decrease labor employment, employment rate, GDP, and carbon emissions. The results imply that population ageing lays heavy burdens on social healthcare system, whilst climate policy reduces governmental health expenditure. In ageing societies, mitigation targets can be achieved less costly and more easily through implementing ETS.

The optimal choice of environmental tax revenue usage: Incentives for cleaner production or end-of-pipe treatment?

The environmental tax system is effective in pollution abatement. However, levying an environmental tax may be detrimental to economic growth. Reasonable use of environmental tax revenue may achieve both environmental protection and economic growth. This study proposes to earmark environmental tax revenue for pollution treatment. Taking fiscal expenditure theory into consideration, environmental tax revenue usage is divided into transfer expenditure and purchase expenditure. An environmental computable general equilibrium (CGE) model is established to evaluate the effects of environmental tax revenue usage. The optimal choice is to increase the environmental tax rate and simultaneously use tax revenue for cleaner production subsidies and end-of-pipe treatment expenditures. Under the optimal scenario, pollutant retention decreases by 21.45%, and GDP increases by 0.006%. For most regions in China, it is better to raise the environmental tax rate to the middle level of a specified range. Moreover, the government should distribute environmental tax revenue evenly across the expenditure of different environmental protection projects.

An Economy-wide Analysis of the Energy and Environmental Impacts of International Trade Policy Adjustments for Chemical Industry in China

In China, the proportion of energy consumption and carbon emissions embodied in international trade in chemical industry is high. It is important to consider how international trade policy adjustments in chemical industry will affect the economy and environment so as to achieve the goal of carbon intensity. This study investigates the impact of international trade policy adjustments. We adopt a computable general equilibrium model to simulate the impacts of trade policy adjustment. The result shows all adjustment plans cause economic losses. All plans will promote energy structure toward cleaner. All plans reduce CO₂ emissions and energy consumption but cannot realize the carbon intensity and energy intensity target. The adjustment of tariff policy in basic raw materials sector should be smaller than that of other sectors. Raising the export tariff is the best policy choice for achieving the carbon intensity target, but other low-carbon policies should be introduced. In particular, protection measures should be taken for the energy industry.

How COVID-19 Pandemic Worsens the Economic Situation of Women in South Africa

Little is known about the general equilibrium impact COVID-19 induces on different gender groups. This paper addresses the problem of relatively few general equilibrium studies focusing on gender impacts of COVID-19. The analysis uses a gendered Computable General Equilibrium model linked to a microsimulation model that analyses a mild and severe scenario of the pandemic on economic and distributional outcomes for females. Irrespective of scenario, findings show that because women employment tend to have unskilled labour which is more concentrated in sectors that are hurt the most by COVID-19 response measures, they suffer disproportionately more from higher unemployment than their male counterparts. The poverty outcomes show worsened vulnerability for female-headed households given that, even prior to the pandemic, poverty was already higher amongst women. These simulated results are consistent with recently observed impacts and address research gaps important for well-designed public policies to reverse these trends.

The effects and reacts of COVID-19 pandemic and international oil price on energy, economy, and environment in China

In 2020, the world experienced several significant events, including the COVID-19 pandemic and the collapse of international crude oil prices. Both have a great impact on a sustainable economy. Taking China as an example, we use a computable general equilibrium model with multi-sectors and multi-households and consider six different scenarios to simulate and evaluate the aggregate impacts of the pandemic and crude oil prices. We divide the impact of the pandemic into the changes of factor input and the changes of consumer preference and find that the decline of factor input is the leading cause of the economic downturn. The sharp drop in crude oil prices has a significant negative impact on the low-carbon economy. Although the pandemic has led to a decline in global carbon emissions, it is only because of the economic downturn. The epidemic situation and the change of oil price have double impacts on the economy, especially the sustainable economy. Adjusting the price gap between fossil energy and renewable energy (e.g., more stringent carbon pricing) and appropriate tax cuts on residents may be effective ways to alleviate the impact, which should be one of the environmental policies in the post-COVID-19 era.

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.

A factorial CGE model for analyzing the impacts of stepped carbon tax on Chinese economy and carbon emission

Carbon tax is a powerful incentive to mitigate carbon emissions and promote energy revolutions. It is of vital importance to systematically explore and examine the socio-economic impacts of levying a carbon tax, such that desired compromises among socio-economic and environmental objectives can be identified. In order to fill the research gap on the stepped carbon tax, this study is to develop a factorial computable general equilibrium (FCGE) model for examining the interactive effects of multiple policy options (e.g., grouping of emission intensity/level, and relevant tax rates), and supporting the formulation of desired carbon-mitigation policies. It is discovered that (1) carbon tax of 18.37 to 38.25 Yuan/ton is a reasonable policy alternative for China; (2) the stepped carbon tax (high level on coal-related fuels) is more efficiency than conventional carbon tax policy; (3) the positive effects for reducing carbon emission intensity can be strengthened with an increasing step range; (4) interactive effects between stepped carbon taxes on coal-related energies and crude oil related energies should be jointly considered by the policy makers.

Impact of energy taxation on economy, environmental and public health quality

This paper argues computable general equilibrium model and assess impact of energy taxation on economy, environmental and public health quality in Tianjin. In order to investigate different energy taxation based on medical cost and labor loss, the computable general equilibrium model integrating with input-output table and social accounting matrix (SAM) was constructed. The medical expense caused by air pollution of Tianjin in 2007 is 396 million yuan and death for 18104 people, which accounted for the total GDP and population 0.754‰ and 1.6‰, respectively. The results show that the enery taxes levy can improve the GDP, but it is only slightly. The energy taxes have adverse impact on energy sector because that the energy cost is increased. The scale of production is reduced, and the capital and labor resources are transferred to low energy consumption low emissions sector. The energy tax levy can reduce air pollutants concentration and improve air environmental quality. The PM₁₀, SO₂ and NO₂ concentration in the energy taxes 5%-30% was reduced by 0.24%-0.24%, 0.09-0.52% and 0.29%-0.52% respectively. The medical expense has little impact on GDP, but labor loss has a certain effect on GDP. For higher energy taxes rate, the health effects on GDP can reach 0.06%-0.16%. This simultaneous economic and environmental improvement and health effect would thus have positive implications regarding energy taxes of the country.

Evaluating multiple emission pathways for fixed cumulative carbon dioxide emissions from global-scale socioeconomic perspectives

Recent climate modeling studies have concluded that cumulative carbon emissions determine temperature increase, regardless of emission pathways. Accordingly, the optimal emission pathway can be determined from a socioeconomic standpoint. To access the path dependence of socioeconomic impacts for cumulative carbon emissions, we used a computable general equilibrium model to analyze impacts on major socioeconomic indicators on a global scale for 30-50 pathways with different emission reduction starting years, different subsequent emission pathways, and three different cumulative 2100 emission scenarios (emissions that meet the 2 °C target, the 2 °C target emissions plus 10 %, and emissions producing radiative forcing of 4.5 W/m2). The results show that even with identical cumulative emission figures, the resulting socioeconomic impacts vary by the pathway realized. For the United Nations 2 °C target, for example, (a) the 95 % confidence interval of cumulative global gross domestic product (GDP) is 1355-1363 trillion US dollars (2010-2100, discount rate = 5 %), (b) the cumulative GDP of pathways with later emission reduction starting years grows weaker (5 % significance level), and (c) emissions in 2100 have a moderate negative correlation with cumulative GDP. These results suggest that GDP loss is minimized with pathways with earlier emission reduction followed by more moderate reduction rates to achieve lower emission levels. Consequently, we suggest an early emission peak to meet the stringent target. In our model setting, it is desirable for emissions to peak by 2020 to reduce mitigation cost and by 2030 at the latest to meet the 2 °C target.

Projections of industrial water withdrawal under shared socioeconomic pathways and climate mitigation scenarios

We estimated global future industrial water withdrawal (IWW) by considering socioeconomic driving forces, climate mitigation, and technological improvements, and by using the output of the Asia-Pacific Integrated Model/Computable General Equilibrium (AIM/CGE) model. We carried out this estimation in three steps. First, we developed a sector- and region-specific regression model for IWW. The model utilized and analyzed cross-country panel data using historical statistics of IWW for 10 sectors and 42 countries. Second, we estimated historical IWW by applying a regression model. Third, we projected future IWW from the output of AIM/CGE. For future projections, we considered and included multiple socioeconomic assumptions, namely different shared socioeconomic pathways (SSPs) with and without climate mitigation policy. In all of the baseline scenarios, IWW was projected to increase throughout the twenty-first century, but growth through the latter half of the century is likely to be modest mainly due to the effects of decreased water use intensity. The projections for global total IWW ranged from 461 to 1,560 km³/year in 2050 and from 196 to 1,463 km³/year in 2100. The effects of climate mitigation on IWW were both negative and positive, depending on the SSPs. We attributed differences among scenarios to the balance between the choices of carbon capture and storage (CCS) and renewable energy. A smaller share of CCS was accompanied by a larger share of non-thermal renewable energy, which requires a smaller amount of water withdrawal per unit of energy production. Renewable energy is, therefore, less water intensive than thermal power with CCS with regard to decarbonizing the power system.

Economic implications of reducing carbon emissions from energy use and industrial processes in Brazil

This study assesses the economy-wide impacts of cutting CO2 emissions on the Brazilian economy. It finds that in 2040, the business-as-usual CO2 emissions from energy use and industrial processes would be almost three times as high as those in 2010 and would account for more than half of total national CO2 emissions. The current policy aims to reduce deforestation by 70 percent by 2017 and lower emissions intensity of the overall economy by 36-39 percent by 2020. If the policy were implemented as planned and continued to 2040, there would be no need to cut CO2 emissions from energy use and industrial processes until 2035, as emissions reduction through controlling deforestation would be enough to meet the voluntary carbon mitigation target of Brazil. The study also finds that using the carbon tax revenue to subsidize wind power can effectively increase the country's wind power output if that is the policy priority. Further, it finds evidence supporting the double dividend hypothesis, i.e., using revenue from a hypothetical carbon tax to finance a cut in labor income tax can significantly lower the GDP impacts of the carbon tax.

Pharmaceutical industry and trade liberalization using computable general equilibrium model

BACKGROUND

Computable general equilibrium models are known as a powerful instrument in economic analyses and widely have been used in order to evaluate trade liberalization effects. The purpose of this study was to provide the impacts of trade openness on pharmaceutical industry using CGE model.

METHODS

Using a computable general equilibrium model in this study, the effects of decrease in tariffs as a symbol of trade liberalization on key variables of Iranian pharmaceutical products were studied. Simulation was performed via two scenarios in this study. The first scenario was the effect of decrease in tariffs of pharmaceutical products as 10, 30, 50, and 100 on key drug variables, and the second was the effect of decrease in other sectors except pharmaceutical products on vital and economic variables of pharmaceutical products. The required data were obtained and the model parameters were calibrated according to the social accounting matrix of Iran in 2006.

RESULTS

The results associated with simulation demonstrated that the first scenario has increased import, export, drug supply to markets and household consumption, while import, export, supply of product to market, and household consumption of pharmaceutical products would averagely decrease in the second scenario. Ultimately, society welfare would improve in all scenarios.

CONCLUSION

We presents and synthesizes the CGE model which could be used to analyze trade liberalization policy issue in developing countries (like Iran), and thus provides information that policymakers can use to improve the pharmacy economics.