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Achieving the triple dividend in Portugal: a dynamic general-equilibrium evaluation of a carbon tax indexed to emissions trading

Author

Listed:
  • Alfredo Marvao Pereira
  • Rui Marvao Pereira

Abstract

Using a dynamic general equilibrium model, we simulate the environmental, economic, and budgetary effects in Portugal of a new carbon tax indexed to the carbon price in the European Union’s Emissions Trading System market. Through careful recycling of the carbon tax revenues to finance lower personal income taxes, lower Social Security contributions, and higher investment tax credits – in particular when changes are directed at promoting energy efficiency – we show that it is possible to design a carbon tax reform that boosts economic growth and strengthens fiscal consolidation. These results served as the basis for a new carbon tax eventually approved by the Portuguese Parliament.

Suggested Citation

  • Alfredo Marvao Pereira & Rui Marvao Pereira, 2019. "Achieving the triple dividend in Portugal: a dynamic general-equilibrium evaluation of a carbon tax indexed to emissions trading," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 22(2), pages 148-163, April.
    • Handle: RePEc:taf:jecprf:v:22:y:2019:i:2:p:148-163
    DOI: 10.1080/17487870.2017.1348298
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    Citations

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    Cited by:

    1. Concetta Castiglione & Davide Infante & Janna Smirnova, 2018. "Non-trivial Factors as Determinants of the Environmental Taxation Revenues in 27 EU Countries," Economies, MDPI, vol. 6(1), pages 1-20, January.
    2. Alfredo Marvão Pereira & Rui Marvão Pereira, 2023. "Energy Taxation Reform with an Environmental Focus in Portugal," Energies, MDPI, vol. 16(3), pages 1-23, January.
    3. Pereira, Alfredo M. & Pereira, Rui M. & Rodrigues, Pedro G., 2016. "A new carbon tax in Portugal: A missed opportunity to achieve the triple dividend?," Energy Policy, Elsevier, vol. 93(C), pages 110-118.
    4. de Bruin, Kelly & Yakut, Aykut Mert, 2024. "Efficiency–equity trade-off in the Irish carbon tax: A CGE investigation of mixed revenue recycling schemes," Economic Modelling, Elsevier, vol. 134(C).
    5. Paula Carvalho Pereda & Andrea Lucchesi & Thais Diniz Oliveira & Rayan Wolf & Crístofer Hood Marques & Luiz Felipe Assis & Jean-David Caprace, 2025. "Sustainable Shipping: Modeling Economic and Greenhouse Gas Impacts of Decarbonization Policies (Part II)," Sustainability, MDPI, vol. 17(9), pages 1-26, April.
    6. Puertas, R. & Marti, L., 2021. "International ranking of climate change action: An analysis using the indicators from the Climate Change Performance Index," Renewable and Sustainable Energy Reviews, Elsevier, vol. 148(C).

    More about this item

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth

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