Document Type: ORIGINAL RESEARCH PAPER

Author

Department of Economics, Faculty of Humanities, Arak University, Arak, Iran

Abstract

Malaysia, as a small and developing country, must reduce carbon emissions because the country is one of the top CO2-emitting countries in the ASEAN region. Therefore, the current study implements two environmental tax policies; carbon and energy taxes, in order to examine the impacts of these policies on the reduction of carbon emission in the whole of the economy by applying a computable general equilibrium model. Since the whole of the government revenue from these tax policies is transferred to all household and labor types through two schemes, a lump sum tax, and a labor tax, respectively, it is assumed that there is revenue neutrality in the model for the government. The findings from simulated scenarios indicate that the carbon tax policy is the more efficient policy for reducing CO2 emission, in both transferring schemes, while its impact on macroeconomic variables is almost lower than the equivalent energy tax. The carbon tax is more effective than the energy tax for Malaysia to achieve 40% carbon reduction target in comparison with its 2005 level. The carbon tax, compared to the energy tax, also leads to more decrease in consumption of fossil fuels. The carbon tax policy, in comparison with the energy tax, due to revenue recycling causes much more increase in the welfare of rural and urban households in Malaysia, especially the welfare of rural (lower income) households.

Graphical Abstract

Highlights

  • Carbon reduction of the carbon tax is more effective than the energy tax policy
  • The negative effects of carbon tax on macroeconomic variables are lower than energy tax
  • Energy consumption in the carbon tax decreases more significantly than the energy tax

Keywords

Main Subjects

Abbaspour, M.; Karbassi, A.; Khalaji Asadi, M.; Moharamnejad, N.; Khadivi, S.; Moradi, MA. (2013). Energy demand model of the household sector and its application in developing metropolitan cities Case Study: Tehran. Pol. J. Environ. Stud., 22(2): 319-329 (11 pages).

Alipour, S.; Karbassi, A. R.; Abbaspour, M.; Saffarzadeh, M.; Moharamnejad, N., (2011). Energy and environmental issues in transport sector. Int. J. Environ. Res., 5(1): 213-224 (12 pages).

Alton, T.; Arndt, C.; Davies, R.; Hartley, F.; Makrelov, K.; Thurlow, J.; Ubogu, D., (2014). Introducing carbon taxes in South Africa. Appl. Energy, 116: 344-354 (11 pages).

Beck, M.; Rivers, N.; Wigle, R.; Yonezawa, H., (2015). Carbon tax and revenue recycling: Impacts on households in British Columbia. Resour. Energy Econ., 41:40–69 (29 pages).

Bor, Y. J.; Huang, Y., (2010). Energy taxation and the double dividend effect in Taiwan’s energy conservation policy-an empirical study using a computable general equilibrium model. Energy Policy, 38: 2086-2100 (15 pages).

Bruvoll, A.; Larsen, B.M., (2004). Greenhouse gas emissions in Norway: do carbon taxes work? Energy Policy, 32: 493-505 (13 pages).

Bye, B., (2000) Environmental tax reform and producer foresight: An intertemporal computable general equilibrium analysis. J. Policy Mod., 22(6): 719-752  (44 pages).

Callan, T.; Lyons, S.; Scott, S.; Tol, R.S.J.; Verde, S., (2009). The distributional implications of a carbon tax in Ireland. Energy Policy, 37: 407-412 (6 pages).

Goulder, L.H., (1993). Energy taxes: traditional efficiency effects and environmental implications. NBER Working Paper Series, No. 4582.

Goulder, L.H., (1995). Effects of carbon taxes in an economy with prior tax distortions: an intertemporal general equilibrium analysis. J. Environ. Econ. Manage., 29: 271-297 (26 pages).

Hausner, U., (2000). Structural adjustment, agricultural performance and income distribution in Zambia: a computable general equilibrium analysis. PhD dissertation, University of Minnesota, USA.

IEA statistics, (2011). CO₂ emissions from fuel combustion 2011-Highlights. International energy Agency, 67-69 (3 pages).

ITF, (2010). Reducing transport greenhouse gas emissions trends and data. OECD. International Transport Forum. pp. 90.

Karbassi, A. R.; Abduli, M.A.; Neshastehriz, S., (2008). Energy saving in Tehran International Flower Exhibition’s Building. Int. J. Environ. Res., 2(1): 75-86 (12 pages).

Karbassi, A.R.; Abduli, M.A.; Mahin Abdollahzadeh, E., (2007). Sustainability of energy production and use in Iran. Energy Policy, 35(10); 5171–5180 (10 pages).

Kim, T.H., (2011). Differential effects of green tax reform over economies: A case of Korea. PhD dissertation, State University of New York at Binghamton

McDougall, R.A., (1999). Energy taxes and greenhouse gas emissions in Australia. General Paper No. G-104. December 1993 and December 1999. Centre of Policy Studies, Monash University.

Muller, F., Hoerner J. A., (1994). Greening state energy taxes: Carbon taxes for revenue and the environment. Pace Environ. Law Rev., 12(1): 5-56 (51 pages).

National Energy Balance (2010). National energy balance. Ministry of Energy, Green Technology and Water. Putrajaya, Malaysia.

Nurdianto, D.A.; Resosudarmo, B.P., (2011). Economy-wide impact of a carbon tax in ASEAN.  EAAERE Joint Conference.

Scrimgeour, F., Oxley, L.; Fatai, K., (2005). Reducing carbon emissions? The relative effectiveness of different types of environmental tax: the case of New Zealand. Environ. Model. Software, 20: 1439-1448 (10 pages).

Solaymani, S., (2016). Impacts of energy subsidy reform on poverty and income inequality in Malaysia. Qual. Quant., 50(6): 2707–2723 (17 pages).

Solaymani, S., Kardooni, R., Yusoff, S. B.; Kari, F., (2015a). The impacts of climate change policies on the transportation sector. Energy, 81: 719-728 (10 pages).

Solaymani, S., Kari, F., (2014). Impacts of energy subsidy reform on the Malaysian economy and transportation sector. Energy Policy, 70: 115-125 (11 pages).

Solaymani, S.; Kardooni, R.; Kari, F.; Yusoff S.B., (2015b). Economic and environmental impacts of energy subsidy reform and oil price shock on the Malaysian transport sector. Trav. Behav. Soc., 2(2): 65-77 (13 pages).

Solaymani, S.; Kari, F., (2013). Environmental and economic effects of high petroleum prices on transport sector. Energy, 60: 435-441 (7 pages).

Solaymani, S.; Kari, F.; Hazly Zakaria, R., (2014). Evaluating the role of subsidy reform in addressing poverty levels in Malaysia: a CGE poverty framework. J. Develop. Stud., 50 (4): 556-569 (14 pages).

Solaymani, S.; Yusof, N.Y.B.M.; Yavari, A., (2015c). The role of government climate policy in an oil price shock: A CGE simulation analysis. 2015 International Conference on Modeling, Simulation and Applied Mathematics, 260-263 (4 pages).

Stampini, M., (2001). Environmental tax reforms: Theory and numerical simulations for the Italian economy. Ph.D. Dissertation. Scuola Superiore Sant’Anna, Italy.

Timilsina, Govinda R.; Shrestha, R.M., (2007). Alternative tax Instruments for CO2 emission reduction and effects of revenue recycling schemes. Energy Stud. Rev., 15(1): 19-48 (25 pages).

Tol, R.S.J., (2007). The impact of a carbon tax on international tourism. Transport. Res., Part D, 12: 129-142.

Wendner, R., (2001). An applied dynamic general equilibrium model of environmental tax reforms and pension policy. J. Policy Model., 23: 25-50 (26 pages).

Wissema, W.; Dellink, R., (2007). Age analysis of the impact of a carbon energy tax on the Irish economy. Ecol. Econom. 61: 671-683 (13 pages).

 

HOW TO CITE THIS ARTICLE:

Solaymani, S. (2017). Carbon and energy taxes in a small and open country. Global J. Environ. Sci. Manage., 3(1): 51-62.


Letters to Editor


GJESM Journal welcomes letters to the editor for the post-publication discussions and corrections which allows debate post publication on its site, through the Letters to Editor. Letters pertaining to manuscript published in GJESM should be sent to the editorial office of GJESM within three months of either online publication or before printed publication, except for critiques of original research. Following points are to be considering before sending the letters (comments) to the editor.

[1] Letters that include statements of statistics, facts, research, or theories should include appropriate references, although more than three are discouraged.
[2] Letters that are personal attacks on an author rather than thoughtful criticism of the author’s ideas will not be considered for publication.
[3] Letters can be no more than 300 words in length.
[4] Letter writers should include a statement at the beginning of the letter stating that it is being submitted either for publication or not.
[5] Anonymous letters will not be considered.
[6] Letter writers must include their city and state of residence or work.
[7] Letters will be edited for clarity and length.

CAPTCHA Image