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Assessing the Impact of a Carbon Tax in Ukraine

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  • Frey, Miriam

Abstract

Ukraine has one of the highest levels of CO2 emissions per GDP in the world. However, the country committed itself to reduce emissions from stationary sources by 10% until 2015. To this end, the Ukrainian government passed a law to impose a carbon tax on the use of energy commodities. The tax was first levied in 2011 with a starting value of 0.1 Ukrainian Hryvnia (UAH)/ton of CO2 and was gradually increased resulting in a current tax level of 0.26 UAH/ton of CO2 (0.02 USD/ton of CO2). Against this background the questions arise 1) whether such a low tax level can be expected to have any impact on CO2 emissions at all and 2) which tax level would be consistent with the policy goal of a 10% emission reduction. Thus, using a computable general equilibrium (CGE) model for Ukraine, this paper assesses the impact of different carbon tax levels on the Ukrainian economy and the environment. The results confirm that the effects of the current tax level are negligible. In order to achieve the reduction target a carbon tax of around 40 UAH/ton of CO2 would be necessary.

Suggested Citation

  • Frey, Miriam, 2014. "Assessing the Impact of a Carbon Tax in Ukraine," Conference papers 332556, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:332556
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