Border adjustments under unilateral carbon pricing: the case of Australian carbon tax

Abstract Realizing a decarbonized society in consistent with the Paris Agreement, a fundamental transformation of the entire economic and social system is needed, and not only carbon intensive sectors but also all sectors and all stakeholders including households must be decarbonized. This chapter demonstrates increasing expectations for carbon pricing in Japan in this global policy context. After the review of the global trend of carbon pricing, historical progress of carbon pricing in Japan and the existing nation-wide carbon tax, i.e. the Global Warming Countermeasure Tax, is explained. There are also two sub-national carbon pricing schemes in Japan, Tokyo ETS and Saitama ETS, which are explained in Chaps. 10.1007/978-981-15-6964-7_6 and 10.1007/978-981-15-6964-7_7 respectively, and not focused in this chapter. We examine the claim that Japan has already implemented high level carbon pricing in terms of various forms of energy taxes. Based on the effective carbon rate which is defined by OECD as the sum of explicit carbon prices and fossil fuel taxes per carbon emission, the nationwide average effective carbon rate of Japan is lower than the average effective carbon rates of OECD countries and its key partner countries. The current carbon pricing schemes in Japan are too modest to realize decarbonization transition and there is a room to upgrade them to exploit full potential of carbon pricing. This chapter discusses adequate levels of carbon prices in compatible with decarbonization transition.

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Double Dividend of the Carbon Tax in Japan: Can We Increase Public Support for Carbon Pricing?

Economics, Law, and Institutions in Asia Pacific - Carbon Pricing in Japan ◽

10.1007/978-981-15-6964-7_13 ◽

2020 ◽

pp. 235-255

Author(s):

Kenji Asakawa ◽

Kouichi Kimoto ◽

Shiro Takeda ◽

Toshi H. Arimura

Keyword(s):

Social Security ◽

Carbon Tax ◽

Public Support ◽

Ghg Emissions ◽

Double Dividend ◽

Corporate Tax ◽

Carbon Pricing ◽

Transportation Sector ◽

Tax Reduction ◽

Cge Modeling

Abstract Carbon pricing is difficult to introduce in many countries because it is not easy to obtain public support for carbon pricing due to the burden associated with it. One way to overcome this difficulty is to rely on the double dividend of a carbon tax. If a government uses revenue from a carbon tax to reduce existing distorting taxes, such as corporate taxes or labor taxes, a carbon tax can improve economic efficiency while reducing greenhouse gas (GHG) emissions. This chapter examines the net burden of a carbon tax with revenue recycling (RR) for two types of stakeholders: firms and households. Using dynamiccomputable general equilibrium (CGE) modeling, we examine the carbon prices needed to achieve the emission targets set for 2030 and 2050. Then, we simulate two types of RR: corporate tax reduction and a reduction in social security payments. We compare the benefit of the tax reduction to the increase in the burden from the carbon tax in scenarios for 2030/2050. In the scenario of corporate tax reduction, by selecting firms from the land transportation sector and power sector, we examine how profit changes due to the carbon tax. We find that the tax burden for a firm in the land transportation sector can be eased greatly with the corporate tax reduction. In the scenario of the social security payment reduction, we find that some households are better off under carbon pricing despite expenditure increases due to the carbon tax. Thus, we show that RR can increase support for the carbon tax.

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Economic Policies to Curb Global Warming - A Case of Papua New Guinea

10.31124/advance.16529130.v1 ◽

2021 ◽

Author(s):

Norris Wangina

Keyword(s):

Global Warming ◽

Papua New Guinea ◽

Carbon Tax ◽

New Guinea ◽

Mirror Image ◽

Economic Policies ◽

Cap And Trade ◽

Carbon Pricing ◽

Advantages And Disadvantages ◽

Carbon Offset

<p>Global warming is a serious problem which requires an urgent solution. In economics context, economists believe that carbon pricing, specifically carbon tax and its mirror image, cap and trade, are the best options and they suggest all countries should use it to address global warming (Goulder & Schein, 2013). However, advantages and disadvantages of carbon pricing have often resulted in some countries accepting the idea and some rejecting it. Therefore, this literature explains how the carbon tax, and cap-and trade work; the probability of their success, specifically in reducing greenhouse gas emissions, and how to attract countries that resist the idea of carbon pricing into implementing it. And finally, this article explains why a carbon offset scheme, under cap and trade, best fits developing countries and which Papua New Guinea can use to improve the lives of its citizens while, at the same time, reducing the concentration of greenhouse gases in the atmosphere. </p>

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Economic Policies to Curb Global Warming - A Case of Papua New Guinea

10.31124/advance.16529130 ◽

2021 ◽

Author(s):

Norris Wangina

Keyword(s):

Global Warming ◽

Papua New Guinea ◽

Carbon Tax ◽

New Guinea ◽

Mirror Image ◽

Economic Policies ◽

Cap And Trade ◽

Carbon Pricing ◽

Advantages And Disadvantages ◽

Carbon Offset

<p>Global warming is a serious problem which requires an urgent solution. In economics context, economists believe that carbon pricing, specifically carbon tax and its mirror image, cap and trade, are the best options and they suggest all countries should use it to address global warming (Goulder & Schein, 2013). However, advantages and disadvantages of carbon pricing have often resulted in some countries accepting the idea and some rejecting it. Therefore, this literature explains how the carbon tax, and cap-and trade work; the probability of their success, specifically in reducing greenhouse gas emissions, and how to attract countries that resist the idea of carbon pricing into implementing it. And finally, this article explains why a carbon offset scheme, under cap and trade, best fits developing countries and which Papua New Guinea can use to improve the lives of its citizens while, at the same time, reducing the concentration of greenhouse gases in the atmosphere. </p>

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Carbon Taxes

10.1093/acrefore/9780199389414.013.727 ◽

2021 ◽

Author(s):

Jorge H. García ◽

Thomas Sterner

Keyword(s):

Low Income ◽

Social Cost ◽

Carbon Tax ◽

Carbon Price ◽

Low Income Countries ◽

Carbon Taxes ◽

Social Cost Of Carbon ◽

Carbon Pricing ◽

Sectoral Differences ◽

Carbon Taxation

Economists argue that carbon taxation (and more generally carbon pricing) is the single most powerful way to combat climate change. Since this is so controversial, we need to explain it better, and to be precise, the efficiency gains are largest when the costs of abatement are strongly heterogeneous. This is often—but not always—the case. When it is not, standards can fill much the same role. To internalize the climate externality, economic efficiency calls for a global carbon tax (or price) that is equal to the global damage or the so-called social cost of carbon. However, equity considerations as well as existing geographical and sectoral differences in the effectiveness of carbon taxation at reducing emissions, suggest earlier implementation of relatively high taxation levels in some sectors or countries—for instance, among richer economies followed by a more gradual phase-in among low-income countries. The number of national and subnational carbon pricing policies that have been implemented around the world during the first years following the Paris Agreement of 2015 is significant. By 2020, these programs covered 22% of global emissions with an average carbon price (weighted by the share of emissions covered) of USD15/tCO2 and a maximum price of USD120/tCO2. The share of emissions covered by carbon pricing as well as carbon prices themselves are expected to consistently rise throughout the decade 2021–2030 and beyond. Many experts agree that the social cost of carbon is in the range USD40–100/tCO2. Anti-climate lobbying, public opposition, and lack of understanding of the instrument are among the key challenges faced by carbon taxation. Opportunities for further expansion of carbon taxation lie in increased climate awareness, the communicative resources governments have to help citizens understand the logic behind carbon taxation, and earmarking of carbon tax revenues to address issues that are important to the public such as fairness.

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Are Carbon Taxes Regressive in India? Evidence from NSSO Data

The Indian Economic Journal ◽

10.1177/0019466220941175 ◽

2019 ◽

Vol 67 (1-2) ◽

pp. 30-44

Author(s):

Aaqib Ahmad Bhat ◽

Prajna Paramita Mishra

Keyword(s):

Energy Use ◽

Carbon Tax ◽

Electricity Consumption ◽

National Sample ◽

Sample Survey ◽

Liquefied Petroleum Gas ◽

Carbon Taxes ◽

Carbon Pricing ◽

Lump Sum ◽

Poor Households

Carbon tax, being less costly in achieving a given abatement target, has been highly recommended by economists and international organisations. However, distributional concerns against the carbon tax has been a matter of concern in the domain of public policy. This article tries to analyse the distributional impact of Carbon tax in India by using National Sample Survey Office (NSSO) data. The results of the study indicate that carbon pricing seems to hit the lower-expenditure households by a greater proportion than the rich elites. The severity was found to be greater for the rural households than the urban households. Strong regressivity was found in the energy use for cooking and lighting. However, for transportation, the results indicate mild progressivity. Among the various energy fuels, households using coal, liquefied petroleum gas (LPG), kerosene, firewood and dung cake for cooking and lighting were found to be hit hard by carbon pricing. In contrast, electricity consumption was found to be distributionally neutral. Petrol and diesel use for transportation were found to be progressive. The study advocates that regressivity of carbon tax should be taken into account by way of targeted revenue recycling measures like lump-sum transfers among poor households and cut in other distortionary taxes.

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BORDER ADJUSTMENTS SUPPLEMENTING A CAP AND TRADE SYSTEM TO COMBAT CLIMATE CHANGE

Climate Change Economics ◽

10.1142/s2010007819500179 ◽

2019 ◽

Vol 10 (04) ◽

pp. 1950017

Author(s):

MELANIE HECHT ◽

WOLFGANG PETERS

Keyword(s):

Climate Change ◽

Carbon Taxes ◽

Cap And Trade ◽

National Treatment ◽

Carbon Pricing ◽

Treatment Principle ◽

Combat Climate Change ◽

Global Carbon ◽

Carbon Prices ◽

Border Adjustments

In the post-Paris Agreement era, the number of carbon pricing initiatives in order to combat climate change grows continuously. However, carbon prices vary substantially among countries which yields negative drawbacks in terms of carbon leakage and loss of competitiveness for firms producing in countries with more stringent regulations. Border adjustments (BAs) could help tackle these negative drawbacks through harmonizing carbon prices across countries. We model a two-stage game where Country A can choose whether to implement BAs in the first stage. In the second stage, producers from both countries compete over prices in Bertrand competition or over quantities in Cournot competition. Most analyses on BAs so far focus on carbon pricing in the form of carbon taxes. However, we observe that many governments achieve their mitigation targets by implementing a cap and trade system with some kind of free allocation of emission allowances. From the current global carbon pricing situation, we identify two conditions for the compliance with the WTO’s national treatment principle that have not been dealt with in detail in previous models: (i) the application of BAs in the form of a cap and trade system and (ii) accounting for free allocation of emission allowances. Our results show that irrespective of the competition type, BAs supplementing a cap and trade system with free allocation improve welfare if the competitive pressure is high.

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The Political Economy of Carbon Tax: International Practice and the Australian Model

Chinese Journal of Urban and Environmental Studies ◽

10.1142/s2345748113500073 ◽

2013 ◽

Vol 01 (01) ◽

pp. 1350007

Author(s):

Alex LO

Keyword(s):

Policy Design ◽

Carbon Tax ◽

Emission Trading ◽

The Political ◽

Carbon Taxes ◽

Carbon Pricing ◽

Fixed Price ◽

Emissions Mitigation ◽

Pricing System ◽

Trading Scheme

Carbon taxes create incentives for controlling greenhouse gases by putting a price on these emissions. In theory major carbon emitters would pay more under an effective carbon tax. In practice political considerations often dominate and consequently compromise effectiveness in emissions mitigation. Australia's carbon pricing mechanism is a recent example. It involves the use of a fixed-price instrument that resembles a carbon tax and will eventually turn into an emission trading scheme and enable price fluctuation. The policy design is however questionable for overcompensating big polluters and legitimizing the failure to curb emissions domestically. This paper offers a review of the development of carbon tax policies in various national contexts with a focus on Australia. Lessons from the international practices could provide a useful reference for China to advance its timely commitment to establishing a carbon pricing system.

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Climatic Impacts of Land-Use Change due to Crop Yield Increases and a Universal Carbon Tax from a Scenario Model*

Journal of Climate ◽

10.1175/jcli-d-13-00154.1 ◽

2014 ◽

Vol 27 (4) ◽

pp. 1413-1424 ◽

Cited By ~ 15

Author(s):

T. Davies-Barnard ◽

P. J. Valdes ◽

J. S. Singarayer ◽

C. D. Jones

Keyword(s):

Land Use ◽

Land Use Change ◽

Land Cover ◽

Crop Yield ◽

Agricultural Land ◽

Carbon Tax ◽

Agricultural Crop ◽

Earth System ◽

Carbon Pricing ◽

Yield Increase

Abstract Future land cover will have a significant impact on climate and is strongly influenced by the extent of agricultural land use. Differing assumptions of crop yield increase and carbon pricing mitigation strategies affect projected expansion of agricultural land in future scenarios. In the representative concentration pathway 4.5 (RCP4.5) from phase 5 of the Coupled Model Intercomparison Project (CMIP5), the carbon effects of these land cover changes are included, although the biogeophysical effects are not. The afforestation in RCP4.5 has important biogeophysical impacts on climate, in addition to the land carbon changes, which are directly related to the assumption of crop yield increase and the universal carbon tax. To investigate the biogeophysical climatic impact of combinations of agricultural crop yield increases and carbon pricing mitigation, five scenarios of land-use change based on RCP4.5 are used as inputs to an earth system model [Hadley Centre Global Environment Model, version 2–Earth System (HadGEM2-ES)]. In the scenario with the greatest increase in agricultural land (as a result of no increase in crop yield and no climate mitigation) there is a significant −0.49 K worldwide cooling by 2100 compared to a control scenario with no land-use change. Regional cooling is up to −2.2 K annually in northeastern Asia. Including carbon feedbacks from the land-use change gives a small global cooling of −0.067 K. This work shows that there are significant impacts from biogeophysical land-use changes caused by assumptions of crop yield and carbon mitigation, which mean that land carbon is not the whole story. It also elucidates the potential conflict between cooling from biogeophysical climate effects of land-use change and wider environmental aims.

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