Carbon pricing and energy efficiency improvement -- why to miss the interaction for developing economies? An illustrative CGE based application to the Pakistan case |
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| Affiliation: | 1. Department of Ecology and Natural Resource Management, Norwegian University of Life Science, Ås, Norway;2. METLA (Finnish Forest Research Institute), Vantaa, Finland;1. CSIRO Oceans & Atmosphere Flagship, Commonwealth Scientific and Industrial Research Organisation (CSIRO), Forestry House, Building 2, Wilf Crane Crescent, Yarralumla, ACT 2601, Australia;2. U.S. Energy Information Administration, 1000 Independence Ave., SW, Washington, DC 20585, USA;1. French Economic Observatory (OFCE), 69 quai d’Orsay, 75340 Paris Cedex 07, France;2. Netherlands Organisation for Applied Scientific Research (TNO), Behavioral and Societal Sciences Strategy and Policy – Economics, Van Mourik Broekmanweg 6, Postbus 49, 2600 AA Delft, The Netherlands;3. National Institute of Ecology and Climate Change (INECC), Periferico Sur 5000. Col. Insurgentes Cuicuilco, Delegacion Coyoacan, 04530 Mexico City, Mexico;4. Agence Française de Développement (AFD), 5 Rue Roland Barthes, 75598 Paris Cedex 12, France;1. Curtin University, School of Economics and Finance, GPO Box U1987, Perth, Western Australia 6845, Australia;2. Curtin University, The John Curtin Institute of Public Policy, GPO Box U1987, Perth, Western Australia 6845, Australia;3. Purdue University, Center for Global Trade Analysis Project, Department of Agricultural Economics, 403 West State Street, Krannert Building, West Lafayette, IN 47907, United States;4. University of the Philippines, Los Baños, College of Economics and Management, Los Baños, Laguna, Philippines |
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| Abstract: | Carbon/energy taxes and energy efficiency improvement are studied well in the recent years for their potential adverse impacts on economy, especially for lost production and international competitiveness, and rebound effects. However, little attention has been paid to investigate them jointly, which can not only prevent fall of energy services cost and thereby rebound effect but reduce the associated macroeconomic costs. This study thus employs a 20 sector CGE model to explore separately the impacts of carbon tax and its coordinated implementation with energy efficiency improvement on the Pakistan economy. The country underwent enormous pressure of energy security issues as well as climate change fallouts in the last couple of years and can be regarded as a suitable candidate for energy/environmental conservation policies to be considered at a broader context with more concrete efforts. The simulation results show that the impact of carbon tax on GDP is negative but resulting reductions in pollutant emissions are relatively high. Moreover, the GDP is expected to grow comparatively positive when analyzed with improvements in energy efficiency, with even higher decline in energy consumption demand and so emissions. This simultaneous economic and environmental improvement would thus have positive implications regarding sustainable development of the country. |
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| Keywords: | Carbon tax Energy efficiency improvement CGE modeling |
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