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Energy taxation and the double dividend effect in Taiwan's energy conservation policy--an empirical study using a computable general equilibrium model

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  • Bor, Yunchang Jeffrey
  • Huang, Yophy

Abstract

Faced with pressure from greenhouse gas reductions and energy price hikes, the Taiwan government is in the process of developing an energy tax regime to reflect environmental external costs and effectively curb energy consumption, as well as mitigate CO2 emissions through an adequate pricing system. This study utilizes a CGE model to simulate and analyze the economic impacts of the draft Energy Tax Bill and its complementary fiscal measures. Under the assumption of tax revenue neutrality, the use of energy tax revenue generated for the purpose of reducing income tax is the best choice with double dividend effects since it will effectively stimulate domestic consumption and investment, and, consequently, mitigate the negative impacts of the distortionary tax regime. The double dividend effect is less significant, however, when the supplementary measures being used are for government expenditure. Nevertheless, all supplementary measures have effectively reduced energy consumption, which means they have delivered at least the first dividend--in the sense of CO2 emissions control. It has been verified in this study that having adequate public-finance policy measures is the key to realizing the double dividend effect.

Suggested Citation

  • Bor, Yunchang Jeffrey & Huang, Yophy, 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, Elsevier, vol. 38(5), pages 2086-2100, May.
  • Handle: RePEc:eee:enepol:v:38:y:2010:i:5:p:2086-2100
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    Cited by:

    1. Alberto Gago & Xavier Labandeira & Xiral López Otero, 2014. "A Panorama on Energy Taxes and Green Tax Reforms," Hacienda Pública Española, IEF, vol. 208(1), pages 145-190, March.
    2. Maurizio Ciaschini & Rosita Pretaroli & Francesca Severini & Claudio Socci, 2013. "Environmental tax and regional government consumption expenditure in a fiscal federalism system," ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT, FrancoAngeli Editore, vol. 2013(2), pages 129-152.
    3. Allan, Grant & Lecca, Patrizio & McGregor, Peter & Swales, Kim, 2014. "The economic and environmental impact of a carbon tax for Scotland: A computable general equilibrium analysis," Ecological Economics, Elsevier, vol. 100(C), pages 40-50.
    4. Qi, Tianyu & Winchester, Niven & Karplus, Valerie J. & Zhang, Da & Zhang, Xiliang, 2016. "An analysis of China's climate policy using the China-in-Global Energy Model," Economic Modelling, Elsevier, vol. 52(PB), pages 650-660.
    5. Paul E. Brockway & Matthew K. Heun & João Santos & John R. Barrett, 2017. "Energy-Extended CES Aggregate Production: Current Aspects of Their Specification and Econometric Estimation," Energies, MDPI, Open Access Journal, vol. 10(2), pages 1-23, February.
    6. Mahmood, Arshad & Marpaung, Charles O.P., 2014. "Carbon pricing and energy efficiency improvement -- why to miss the interaction for developing economies? An illustrative CGE based application to the Pakistan case," Energy Policy, Elsevier, vol. 67(C), pages 87-103.
    7. Masoud Yahoo & Jamal Othman, 2017. "Carbon and energy taxation for CO2 mitigation: a CGE model of the Malaysia," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 19(1), pages 239-262, February.
    8. Solaymani, Saeed & Kardooni, Roozbeh & Yusoff, Sumiani Binti & Kari, Fatimah, 2015. "The impacts of climate change policies on the transportation sector," Energy, Elsevier, vol. 81(C), pages 719-728.
    9. Gabriel Bachner & Birgit Bednar-Friedl, 2016. "Counterbalancing the Effects of Climate Change Adaptation on Public Budgets: Factor Taxes, Transfers, or Foreign Lending?," Graz Economics Papers 2016-07, University of Graz, Department of Economics.
    10. Orlov, Anton & Grethe, Harald & McDonald, Scott, 2013. "Carbon taxation in Russia: Prospects for a double dividend and improved energy efficiency," Energy Economics, Elsevier, vol. 37(C), pages 128-140.
    11. Wianwiwat, Suthin & Asafu-Adjaye, John, 2013. "Is there a role for biofuels in promoting energy self sufficiency and security? A CGE analysis of biofuel policy in Thailand," Energy Policy, Elsevier, vol. 55(C), pages 543-555.

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