Implications of CO2 reduction policies for a high carbon emitting economy

Asafu-Adjaye, John and Mahadevan, Renuka (2013) Implications of CO2 reduction policies for a high carbon emitting economy. Energy Economics, 38 32-41. doi:10.1016/j.eneco.2013.03.004

Author Asafu-Adjaye, John
Mahadevan, Renuka
Title Implications of CO2 reduction policies for a high carbon emitting economy
Journal name Energy Economics   Check publisher's open access policy
ISSN 0140-9883
Publication date 2013-07
Year available 2013
Sub-type Article (original research)
DOI 10.1016/j.eneco.2013.03.004
Volume 38
Start page 32
End page 41
Total pages 10
Place of publication Amsterdam, Netherlands
Publisher Elsevier
Collection year 2014
Language eng
Abstract This paper uses a dynamic computable general equilibrium model to compare the macroeconomic and sectoral impacts of three environmental policies in Australia - an emissions trading scheme (ETS), an ETS combined with technological innovation in the renewable energy sector and a fuel tax as an alternative to the ETS. Overall, the impacts of the ETS were not significantly adverse. Although the fuel tax had similar impacts to the ETS on key macro-variables such as real GDP, employment, household consumption, exports and imports, it was however not effective compared to the latter in reducing emissions. Neither policy led to inflation growth of more than 0.8% for any coal mining and non-mining Australian state. At the sectoral level, the GDP growth of energy-intensive industries such as coal, iron ore, steel and coal-powered electricity generators is adversely affected while electricity generators who use gas and renewable energy sources and the forestry sector gain. It was also found that a 10% technological change in the renewable energy sector over a decade did not significantly improve the outcome when coupled with the ETS. Thus the Australian government's industry assistance to invest in low pollution technologies needs to be more aggressive to meet current and future international emission abatement targets.
Keyword Carbon tax
Fuel tax
Emission trading scheme
Q-Index Code C1
Q-Index Status Confirmed Code
Institutional Status UQ

Document type: Journal Article
Sub-type: Article (original research)
Collections: Official 2014 Collection
School of Economics Publications
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