IDEAS home Printed from https://ideas.repec.org/a/eee/rensus/v211y2025ics1364032124010177.html
   My bibliography  Save this article

Model for subsidizing industry and power company through gray-electricity taxation

Author

Listed:
  • Choorikkat, Sreerag
  • Lee, Yu-Ching
  • Hsu, Hsin-Wei

Abstract

Global warming is a pressing global issue, necessitating the reduction of carbon emissions to zero. This study employs an Equilibrium Problem with Equilibrium Constraints model, involving three agents: the government, a state-owned power company, and industry. The solution identifies how much of the electricity generated from renewable resources by power company and industry can be subsidized solely from the green tax revenue pool. The solution of the green tax that can be imposed on the power company for the unit of electricity generated from fossil fuel resources, along with the solution of subsidy for the industries for a unit of electricity generated from renewable resources, are observed. The study considers twenty possible cases of average electricity prices and rebates for the power company. It then consider the scenario of net-zero carbon emissions for the same twenty cases. In the net-zero scenario, the total amount of electricity that can be subsidized using only the green tax revenue pool will decrease significantly while increasing the rebate to the power company. Doing so requires the government to find additional income resources to subsidize the power company for the remaining electricity generated from renewable resources. To reach minimal carbon emissions, the government must allocate 0.3 %–1 % of the gross domestic product (2022) to subsidize the transition from fossil fuels to renewables. Overall, the study demonstrates that raising power company rebates and implementing higher green taxes for gray electricity can slow carbon emissions.

Suggested Citation

  • Choorikkat, Sreerag & Lee, Yu-Ching & Hsu, Hsin-Wei, 2025. "Model for subsidizing industry and power company through gray-electricity taxation," Renewable and Sustainable Energy Reviews, Elsevier, vol. 211(C).
    • Handle: RePEc:eee:rensus:v:211:y:2025:i:c:s1364032124010177
    DOI: 10.1016/j.rser.2024.115291
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1364032124010177
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.rser.2024.115291?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Liao, Chuan & Erbaugh, James T. & Kelly, Allison C. & Agrawal, Arun, 2021. "Clean energy transitions and human well-being outcomes in Lower and Middle Income Countries: A systematic review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 145(C).
    2. Kuei-tien Chou & David Walther & Hwa-meei Liou, 2019. "The Conundrums of Sustainability: Carbon Emissions and Electricity Consumption in the Electronics and Petrochemical Industries in Taiwan," Sustainability, MDPI, vol. 11(20), pages 1-23, October.
    3. Costantini, Valeria & Sforna, Giorgia, 2020. "A dynamic CGE model for jointly accounting ageing population, automation and environmental tax reform. European Union as a case study," Economic Modelling, Elsevier, vol. 87(C), pages 280-306.
    4. Zou, Peng & Chen, Qixin & Xia, Qing & He, Guannan & Kang, Chongqing & Conejo, Antonio J., 2016. "Pool equilibria including strategic storage," Applied Energy, Elsevier, vol. 177(C), pages 260-270.
    5. Hu, Haisheng & Dong, Wanhao & Zhou, Qian, 2021. "A comparative study on the environmental and economic effects of a resource tax and carbon tax in China: Analysis based on the computable general equilibrium model," Energy Policy, Elsevier, vol. 156(C).
    6. Norouzi, Nima & Fani, Maryam & Talebi, Saeed, 2022. "Green tax as a path to greener economy: A game theory approach on energy and final goods in Iran," Renewable and Sustainable Energy Reviews, Elsevier, vol. 156(C).
    7. Rodríguez, Miguel & Robaina, Margarita & Teotónio, Carla, 2019. "Sectoral effects of a Green Tax Reform in Portugal," Renewable and Sustainable Energy Reviews, Elsevier, vol. 104(C), pages 408-418.
    8. Matto Mildenberger & Erick Lachapelle & Kathryn Harrison & Isabelle Stadelmann-Steffen, 2022. "Limited impacts of carbon tax rebate programmes on public support for carbon pricing," Nature Climate Change, Nature, vol. 12(2), pages 141-147, February.
    9. Chen, Sheng & Sun, Guoqiang & Wei, Zhinong & Wang, Dan, 2020. "Dynamic pricing in electricity and natural gas distribution networks: An EPEC model," Energy, Elsevier, vol. 207(C).
    10. Martelli, Emanuele & Freschini, Marco & Zatti, Matteo, 2020. "Optimization of renewable energy subsidy and carbon tax for multi energy systems using bilevel programming," Applied Energy, Elsevier, vol. 267(C).
    11. Christophe McGlade & Paul Ekins, 2015. "The geographical distribution of fossil fuels unused when limiting global warming to 2 °C," Nature, Nature, vol. 517(7533), pages 187-190, January.
    12. Sonja Wogrin & Salvador Pineda & Diego A. Tejada-Arango, 2020. "Applications of Bilevel Optimization in Energy and Electricity Markets," Springer Optimization and Its Applications, in: Stephan Dempe & Alain Zemkoho (ed.), Bilevel Optimization, chapter 0, pages 139-168, Springer.
    13. Ying Li & Mi Zhou & Huaping Sun & Jia Liu, 2023. "Assessment of environmental tax and green bonds impacts on energy efficiency in the European Union," Economic Change and Restructuring, Springer, vol. 56(2), pages 1063-1081, April.
    14. Jaber Valinejad & Mousa Marzband & Michael Elsdon & Ameena Saad Al-Sumaiti & Taghi Barforoushi, 2019. "Dynamic Carbon-Constrained EPEC Model for Strategic Generation Investment Incentives with the Aim of Reducing CO 2 Emissions," Energies, MDPI, vol. 12(24), pages 1-35, December.
    15. Rahman, Farahiyah Abdul & Aziz, Md Maniruzzaman A. & Saidur, R. & Bakar, Wan Azelee Wan Abu & Hainin, M.R & Putrajaya, Ramadhansyah & Hassan, Norhidayah Abdul, 2017. "Pollution to solution: Capture and sequestration of carbon dioxide (CO2) and its utilization as a renewable energy source for a sustainable future," Renewable and Sustainable Energy Reviews, Elsevier, vol. 71(C), pages 112-126.
    16. Yoo, Seung-Hoon, 2005. "Electricity consumption and economic growth: evidence from Korea," Energy Policy, Elsevier, vol. 33(12), pages 1627-1632, August.
    17. Goutam Dutta & Krishnendranath Mitra, 2017. "A literature review on dynamic pricing of electricity," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 68(10), pages 1131-1145, October.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Tobias Mueller & Steven Gronau, 2023. "Fostering Macroeconomic Research on Hydrogen-Powered Aviation: A Systematic Literature Review on General Equilibrium Models," Energies, MDPI, vol. 16(3), pages 1-33, February.
    2. Norouzi, Nima & Fani, Maryam & Talebi, Saeed, 2022. "Green tax as a path to greener economy: A game theory approach on energy and final goods in Iran," Renewable and Sustainable Energy Reviews, Elsevier, vol. 156(C).
    3. Zhang, Jinbo & Meng, Haoyun & Chen, Liu & Zhang, Yang & Fu, Zhenghui & Xie, Yulei & Guo, Huaicheng, 2025. "Reversing climate policy stereotypes: Evidence from an energy-dependent region and China's major economic circles," Applied Energy, Elsevier, vol. 380(C).
    4. Jerez Monsalves, Juan & Bergaentzlé, Claire & Keles, Dogan, 2024. "Waste-heat recovery utilisation for district heating systems under diverse pricing schemes: A bi-level modelling approach," Applied Energy, Elsevier, vol. 375(C).
    5. Li, Yangfan & Zhang, Xiaoyun, 2023. "Recycling scheme of carbon pricing for inclusive decarbonization and energy transition: A recursive computable general equilibrium analysis in China," Renewable Energy, Elsevier, vol. 217(C).
    6. Joaquín Bernal-Ramírez & Jair Ojeda-Joya & Camila Agudelo-Rivera & Felipe Clavijo-Ramírez & Carolina Durana-Ángel & Clark Granger-Castaño & Daniel Osorio-Rodríguez & Daniel Parra-Amado & José Pulido &, 2022. "Impacto macroeconómico del cambio climático en Colombia," Revista ESPE - Ensayos sobre Política Económica, Banco de la Republica de Colombia, issue 102, pages 1-62, July.
    7. Henrique S. Basso & Ourania Dimakou & Myroslav Pidkuyko, 2024. "How consumption carbon emission intensity varies across Spanish households," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 15(1), pages 95-125, March.
    8. Al-mulali, Usama & Fereidouni, Hassan Gholipour & Lee, Janice Y.M., 2014. "Electricity consumption from renewable and non-renewable sources and economic growth: Evidence from Latin American countries," Renewable and Sustainable Energy Reviews, Elsevier, vol. 30(C), pages 290-298.
    9. Huang, Qisheng & Xu, Yunjian & Courcoubetis, Costas, 2020. "Stackelberg competition between merchant and regulated storage investment in wholesale electricity markets," Applied Energy, Elsevier, vol. 264(C).
    10. Omri, Anis, 2014. "An international literature survey on energy-economic growth nexus: Evidence from country-specific studies," Renewable and Sustainable Energy Reviews, Elsevier, vol. 38(C), pages 951-959.
    11. Gerard Bikorimana & Charles Rutikanga & Didier Mwizerwa, 2020. "Linking energy consumption with economic growth: Rwanda as a case study," ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT, FrancoAngeli Editore, vol. 2020(2), pages 181-200.
    12. Waldemar Karpa & Antonio Grginović, 2021. "(Not So) Stranded: The Case of Coal in Poland," Energies, MDPI, vol. 14(24), pages 1-16, December.
    13. Vasiliki Tzelepi & Myrto Zeneli & Dimitrios-Sotirios Kourkoumpas & Emmanouil Karampinis & Antonios Gypakis & Nikos Nikolopoulos & Panagiotis Grammelis, 2020. "Biomass Availability in Europe as an Alternative Fuel for Full Conversion of Lignite Power Plants: A Critical Review," Energies, MDPI, vol. 13(13), pages 1-26, July.
    14. Jun Sheng Teh & Yew Heng Teoh & Heoy Geok How & Thanh Danh Le & Yeoh Jun Jie Jason & Huu Tho Nguyen & Dong Lin Loo, 2021. "The Potential of Sustainable Biomass Producer Gas as a Waste-to-Energy Alternative in Malaysia," Sustainability, MDPI, vol. 13(7), pages 1-31, April.
    15. Du, Minzhe & Wu, Fenger & Luo, Lichun & Wang, Qiya & Liao, Liping, 2025. "Spatial effects of the market-based energy allocation on energy efficiency: A quasi-natural experiment of energy quota trading," Energy, Elsevier, vol. 318(C).
    16. Bretschger, Lucas, 2021. "Getting the Costs of Environmental Protection Right: Why Climate Policy Is Inexpensive in the End," Ecological Economics, Elsevier, vol. 188(C).
    17. Waseem Yousaf & Muhammad Sajjad Hussain & Anam Aziz, 2021. "The Role of Green Energy on Reducing the Carbon Emission in ASEAN Countries," iRASD Journal of Energy and Environment, International Research Association for Sustainable Development (iRASD), vol. 2(1), pages 34-39, June.
    18. Ghorbani, Bahram & Mehrpooya, Mehdi & Ghasemzadeh, Hossein, 2018. "Investigation of a hybrid water desalination, oxy-fuel power generation and CO2 liquefaction process," Energy, Elsevier, vol. 158(C), pages 1105-1119.
    19. Feng Dong & Yuling Pan, 2020. "Evolution of Renewable Energy in BRI Countries: A Combined Econometric and Decomposition Approach," IJERPH, MDPI, vol. 17(22), pages 1-18, November.
    20. Agarwala, Matthew & Burke, Matt & Klusak, Patrycja & Mohaddes, Kamiar & Volz, Ulrich & Zenghelis, Dimitri, 2021. "Climate Change And Fiscal Sustainability: Risks And Opportunities," National Institute Economic Review, National Institute of Economic and Social Research, vol. 258, pages 28-46, November.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:rensus:v:211:y:2025:i:c:s1364032124010177. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/600126/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.