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Energy Pricing Policy and Environmental Quality in Nigeria: A Dynamic Computable General Equilibrium Approach

Author

Listed:
  • Opeyemi Akinyemi

    (Department of Economics and Development Studies, Covenant University, Nigeria)

  • Philip. O. Alege

    (Department of Economics and Development Studies, Covenant University, Nigeria,)

  • Oluseyi. O. Ajayi

    (Department of Mechanical Engineering, Covenant University, Nigeria,)

  • Henry Okodua

    (Department of Economics and Development Studies, Covenant University, Nigeria.)

Abstract

The fuel subsidy policy as a policy had been argued to hamper efforts at environmental sustainability. Thus, this study investigates the extent to which the removal of fuel subsidy influences the level of carbon emissions in Nigeria over a 5 year period. It adopts the recursive dynamic version of the partnership for economic policy computable general equilibrium model based on the 2006 Nigerian social accounting matrix. Simulating a partial, gradual and complete removal of import tariff on imported petrol indicates reduction of emissions only when subsidy removal was partial. Findings from the results showed carbon emissions marginally increased under the gradual and one shot removal. This suggests that removing petrol subsidy was not sufficient to reduce carbon emissions level, but should be accompanied with necessary supporting policies. Fuel blending can be a useful alternative to fossil fuel along with renewable energy and green growth practices to ensure a low-carbon growth strategy

Suggested Citation

  • Opeyemi Akinyemi & Philip. O. Alege & Oluseyi. O. Ajayi & Henry Okodua, 2017. "Energy Pricing Policy and Environmental Quality in Nigeria: A Dynamic Computable General Equilibrium Approach," International Journal of Energy Economics and Policy, Econjournals, vol. 7(1), pages 268-276.
    • Handle: RePEc:eco:journ2:2017-01-27
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    References listed on IDEAS

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    1. Arief Anshory Yusuf & Arief Ramayandi, 2010. "Reducing Fuel Subsidy or Taxing Carbon? Comparing the Two Instruments from the Economy, Environment, and Equity Perspectives for Indonesia," Economics and Finance in Indonesia, Faculty of Economics and Business, University of Indonesia, vol. 58, pages 115-129, April.
    2. Hong, Li & Liang, Dong & Di, Wang, 2013. "Economic and environmental gains of China's fossil energy subsidies reform: A rebound effect case study with EIMO model," Energy Policy, Elsevier, vol. 54(C), pages 335-342.
    3. Chiripanhura, Blessing & Chifamba, Ronald, 2015. "The impact of Namibia’s income tax reform: A CGE analysis," AGRODEP working papers 20, International Food Policy Research Institute (IFPRI).
    4. Opeyemi Akinyemi & Philip O. Alege & Oluseyi O. Ajayi & Lloyd Amaghionyeodiwe & Adeyemi A. Ogundipe, 2015. "Fuel Subsidy Reform and Environmental Quality in Nigeria," International Journal of Energy Economics and Policy, Econjournals, vol. 5(2), pages 540-549.
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    Cited by:

    1. Philip Alege & Queen-Esther Oye & Omobola Adu, 2019. "Renewable Energy, Shocks and the Growth Agenda: A Dynamic Stochastic General Equilibrium Approach," International Journal of Energy Economics and Policy, Econjournals, vol. 9(1), pages 160-167.
    2. Cicowiez, Martin & Akinyemi, Opeyemi & Sesan, Temilade & Adu, Omobola & Sokeye, Babajide, 2022. "Gender-differentiated impacts of a Rural Electrification Policy in Nigeria," Energy Policy, Elsevier, vol. 162(C).
    3. Opeyemi Akinyemi & Uchenna Efobi & Evans Osabuohien & Philip Alege, 2019. "Regional Integration and Energy Sustainability in Africa: Exploring the Challenges and Prospects for ECOWAS," African Development Review, African Development Bank, vol. 31(4), pages 517-528, December.
    4. Samuel Egbetokun & Evans S. Osabuohien & Temidayo Akinbobola, 2018. "Feasible Environmental Kuznets and Institutional Quality in North and Southern African Sub-regions," International Journal of Energy Economics and Policy, Econjournals, vol. 8(1), pages 104-115.
    5. Ojo, Ademola Eyitope, 2020. "Determinants of Market Power in Electric Power Market of Rural Areas in Nigeria," Asian Development Policy Review, Asian Economic and Social Society, vol. 8(3), pages 156-170, September.
    6. Ademola E. Ojo & Ditimi Amassoma, 2021. "Infrastructures Development, Environmental Quality and Economic Growth in Nigeria," Journal of Infrastructure Development, India Development Foundation, vol. 13(2), pages 129-144, December.
    7. Djoni Hartono & Ahmad Komarulzaman & Tony Irawan & Anda Nugroho, 2020. "Phasing out Energy Subsidies to Improve Energy Mix: A Dead End," Energies, MDPI, vol. 13(9), pages 1-15, May.
    8. Evans, Olaniyi & Nwaogwugwu, Isaac & Vincent, Olusegun & Wale-Awe, Olawale & Mesagan, Ekundayo & Ojapinwa, Taiwo, 2023. "The socio-economics of the 2023 fuel subsidy removal in Nigeria," MPRA Paper 118360, University Library of Munich, Germany.
    9. Dzyuba, Yu. & Bakalova, I., 2023. "CGE models for resource-based economy: A comprehensive bibliometric analysis," Journal of the New Economic Association, New Economic Association, vol. 61(4), pages 12-50.

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    More about this item

    Keywords

    Energy Policy; Environmental Quality; Dynamic Computable General Equilibrium;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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