IDEAS home Printed from https://ideas.repec.org/p/cop/wpaper/g-243.html

An Emissions Trading Scheme for Australia: National and Regional Impacts

Author

Listed:
  • Philip D. Adams
  • Brian R. Parmenter
  • George Verikios

Abstract

Computable general equilibrium modelling in Australia is oriented towards providing inputs to the policy-formation process, a process that requires detail. We explain how the necessary level of detail can be provided using analysis of the potential economic impacts of a carbon price on the Australian economy that operates as part of a global emissions trading scheme. The global scheme sets the price and allocation of permits across countries. We find that domestic abatement falls well short of targeted abatement, Australia's GDP is 1.1% lower relative to the basecase, and some industries and regions are vulnerable to employment losses.

Suggested Citation

  • Philip D. Adams & Brian R. Parmenter & George Verikios, 2014. "An Emissions Trading Scheme for Australia: National and Regional Impacts," Centre of Policy Studies/IMPACT Centre Working Papers g-243, Victoria University, Centre of Policy Studies/IMPACT Centre.
    • Handle: RePEc:cop:wpaper:g-243
    as

    Download full text from publisher

    File URL: https://www.copsmodels.com/ftp/workpapr/g-243.pdf
    File Function: Initial version, 2014-05
    Download Restriction: no
    File URL: https://www.copsmodels.com/elecpapr/g-243.htm
    File Function: Local abstract: may link to additional material.
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Berndt, Ernst R & Wood, David O, 1975. "Technology, Prices, and the Derived Demand for Energy," The Review of Economics and Statistics, MIT Press, vol. 57(3), pages 259-268, August.
    2. repec:bla:ausecr:v:40:y:2007:i:4:p:432-452 is not listed on IDEAS
    3. R.A. McDougall, 1993. "Energy Taxes and Greenhouse Gas Emissions in Australia," Centre of Policy Studies/IMPACT Centre Working Papers g-104, Victoria University, Centre of Policy Studies/IMPACT Centre.
    4. Alan A. Powell, 1993. "Integrating Econometric and Environmetric Modelling," Centre of Policy Studies/IMPACT Centre Working Papers g-102, Victoria University, Centre of Policy Studies/IMPACT Centre.
    5. Garnaut,Ross, 2008. "The Garnaut Climate Change Review," Cambridge Books, Cambridge University Press, number 9780521744447.
    6. Edward A. Hudson & Dale W. Jorgenson, 1974. "U.S. Energy Policy and Economic Growth, 1975-2000," Bell Journal of Economics, The RAND Corporation, vol. 5(2), pages 461-514, Autumn.
    7. Adams, Philip D. & Parmenter, Brian R., 2013. "Computable General Equilibrium Modeling of Environmental Issues in Australia," Handbook of Computable General Equilibrium Modeling, in: Peter B. Dixon & Dale Jorgenson (ed.), Handbook of Computable General Equilibrium Modeling, edition 1, volume 1, chapter 0, pages 553-657, Elsevier.
    8. Nordhaus, William, 2013. "Integrated Economic and Climate Modeling," Handbook of Computable General Equilibrium Modeling, in: Peter B. Dixon & Dale Jorgenson (ed.), Handbook of Computable General Equilibrium Modeling, edition 1, volume 1, chapter 0, pages 1069-1131, Elsevier.
    9. McKibbin, Warwick J. & Wilcoxen, Peter J., 1998. "The theoretical and empirical structure of the G-Cubed model," Economic Modelling, Elsevier, vol. 16(1), pages 123-148, January.
    10. repec:aen:journl:1991v12-02-a08 is not listed on IDEAS
    11. Philip Adams & Janine Dixon & James Giesecke & Mark Horridge, 2010. "MMRF: Monash Multi-Regional Forecasting Model: A Dynamic Multi-Regional Model of the Australian Economy," Centre of Policy Studies/IMPACT Centre Working Papers g-223, Victoria University, Centre of Policy Studies/IMPACT Centre.
    12. Lawrence Goulder, 1995. "Environmental taxation and the double dividend: A reader's guide," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 2(2), pages 157-183, August.
    13. Hertel, Thomas, 1997. "Global Trade Analysis: Modeling and applications," GTAP Books, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, number 7685, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jafari, Yaghoob & Engemann, Helena & Heckelei, Thomas & Hainsch, Karlo, 2023. "National and Regional Economic Impacts of changes in Germany's electricity mix: A dynamic analysis through 2050," Utilities Policy, Elsevier, vol. 82(C).
    2. Hodges, Cedric, 2020. "The future of Australia’s thermal coal industry in a low carbon environment," Conference papers 333232, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    3. Mishra, Vinod & Smyth, Russell, 2017. "Conditional convergence in Australia's energy consumption at the sector level," Energy Economics, Elsevier, vol. 62(C), pages 396-403.
    4. Nong, Duy & Meng, Sam & Siriwardana, Mahinda, 2017. "An assessment of a proposed ETS in Australia by using the MONASH-Green model," Energy Policy, Elsevier, vol. 108(C), pages 281-291.
    5. Standardi, Gabriele & Cai, Yiyong & Yeh, Sonia, 2017. "Sensitivity of modeling results to technological and regional details: The case of Italy's carbon mitigation policy," Energy Economics, Elsevier, vol. 63(C), pages 116-128.
    6. Nong, Duy & Simshauser, Paul, 2020. "On energy and climate change policies: The impact of baseline projections," Applied Energy, Elsevier, vol. 269(C).
    7. Nong, Duy & Siriwardana, Mahinda, 2018. "Effects on the U.S. economy of its proposed withdrawal from the Paris Agreement: A quantitative assessment," Energy, Elsevier, vol. 159(C), pages 621-629.
    8. Nong, Duy, 2019. "Potential economic impacts of global wild catch fishery decline in Southeast Asia and South America," Economic Analysis and Policy, Elsevier, vol. 62(C), pages 213-226.
    9. Nong, Duy & Simshauser, Paul & Nguyen, Duong Binh, 2021. "Greenhouse gas emissions vs CO2 emissions: Comparative analysis of a global carbon tax," Applied Energy, Elsevier, vol. 298(C).
    10. Nelson, Tim & Pascoe, Owen & Calais, Prabpreet & Mitchell, Lily & McNeill, Judith, 2019. "Efficient integration of climate and energy policy in Australia’s National Electricity Market," Economic Analysis and Policy, Elsevier, vol. 64(C), pages 178-193.
    11. John Freebairn, 2016. "A Comparison of Policy Instruments to Reduce Greenhouse Gas Emissions," Economic Papers, The Economic Society of Australia, vol. 35(3), pages 204-215, September.
    12. Tim Nelson & Tahlia Nolan & Joel Gilmore, 2022. "What’s next for the Renewable Energy Target – resolving Australia’s integration of energy and climate change policy?," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 66(1), pages 136-163, January.
    13. Zhaojun Wang & Duy Nong & Amanda M. Countryman & James J. Corbett & Travis Warziniack, 2020. "Potential impacts of ballast water regulations on international trade, shipping patterns, and the global economy: An integrated transportation and economic modeling assessment," Papers 2008.11334, arXiv.org.
    14. Lin, Boqiang & Jia, Zhijie, 2019. "Impacts of carbon price level in carbon emission trading market," Applied Energy, Elsevier, vol. 239(C), pages 157-170.
    15. Tim Nelson & Stephanie Bashir & Eleanor McCracken-Hewson & Michael Pierce, 2017. "The Changing Nature of the Australian Electricity Industry," Economic Papers, The Economic Society of Australia, vol. 36(2), pages 104-120, June.
    16. Siriwardana, Mahinda & Nong, Duy, 2015. "Australia in an International Emissions Trading (ETS) Scheme: An Economic Evaluation Using the GTAP-E Model," Conference papers 332632, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    17. Meng, Sam & Siriwardana, Mahinda & McNeill, Judith & Nelson, Tim, 2018. "The impact of an ETS on the Australian energy sector: An integrated CGE and electricity modelling approach," Energy Economics, Elsevier, vol. 69(C), pages 213-224.
    18. Jeffrey C Peters, 2016. "GTAP-E-Power: An Electricity-detailed Economy-wide Model," Journal of Global Economic Analysis, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, vol. 1(2), pages 156-187, December.
    19. Zhang, Mingming & Wood, Michael O. & Wilson, Jeffrey & Wu, Tingting, 2025. "The impacts of China's ETS on firm competitiveness: Evidence from the power and heat production sector," Global Finance Journal, Elsevier, vol. 64(C).
    20. McNeill, Judith, 2015. "A review of the economic modelling on the impacts of the Australian carbon tax," Conference papers 332598, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    21. Azam Ghezelbash & Vahid Khaligh & Seyed Hamed Fahimifard & J. Jay Liu, 2023. "A Comparative Perspective of the Effects of CO 2 and Non-CO 2 Greenhouse Gas Emissions on Global Solar, Wind, and Geothermal Energy Investment," Energies, MDPI, vol. 16(7), pages 1-20, March.
    22. Phuong Thao Nguyen, 2024. "Impacts of emission trading scheme in Vietnam: A perspective of revenue redistributions," Sustainable Development, John Wiley & Sons, Ltd., vol. 32(5), pages 5452-5462, October.
    23. Roland Cunha Montenegro & Vidas Lekavičius & Jurica Brajković & Ulrich Fahl & Kai Hufendiek, 2019. "Long-Term Distributional Impacts of European Cap-and-Trade Climate Policies: A CGE Multi-Regional Analysis," Sustainability, MDPI, vol. 11(23), pages 1-26, December.

    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. Adams, Philip D. & Parmenter, Brian R., 2013. "Computable General Equilibrium Modeling of Environmental Issues in Australia," Handbook of Computable General Equilibrium Modeling, in: Peter B. Dixon & Dale Jorgenson (ed.), Handbook of Computable General Equilibrium Modeling, edition 1, volume 1, chapter 0, pages 553-657, Elsevier.
    2. Philip Adams & Janine Dixon & Mark Horridge, 2015. "The Victoria University Regional Model (VURM): Technical Documentation, Version 1.0," Centre of Policy Studies/IMPACT Centre Working Papers g-254, Victoria University, Centre of Policy Studies/IMPACT Centre.
    3. Glyn Wittwer & Mark Horridge, 2018. "SinoTERM365, Bottom-up Representation of China at the Prefectural Level," Centre of Policy Studies/IMPACT Centre Working Papers g-285, Victoria University, Centre of Policy Studies/IMPACT Centre.
    4. Glyn Wittwer & Mark Horridge, 2018. "Prefectural Representation of the Regions of China in a Bottom-up CGE Model: SinoTERM365," Journal of Global Economic Analysis, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, vol. 3(2), pages 178-213, December.
    5. Yung Joon Lee & Hyoungsoo Zang, 1998. "Urbanisation and Regional Productivity in Korean Manufacturing," Urban Studies, Urban Studies Journal Limited, vol. 35(11), pages 2085-2099, November.
    6. Van Ha, Pham & Kompas, Tom & Nguyen, Hoa Thi Minh & Long, Chu Hoang, 2017. "Building a better trade model to determine local effects: A regional and intertemporal GTAP model," Economic Modelling, Elsevier, vol. 67(C), pages 102-113.
    7. Anna Creti & Bertrand Villeneuve, 2003. "Politique énergétique : aspects stratégiques de la question des approvisionnements," Economie & Prévision, La Documentation Française, vol. 158(2), pages 73-88.
    8. Claudia S. Gómez-López & Luis A. Puch, 2008. "Uso de Energía en Economías Exportadoras de Petróleo," Economic Reports 24-08, FEDEA.
    9. Standardi, Gabriele, 2017. "Endogenous technical change linked to international mobility of primary factors in climate change scenarios: global welfare implications using the GTAP model," Conference papers 332920, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    10. Nelson, Tim & Pascoe, Owen & Calais, Prabpreet & Mitchell, Lily & McNeill, Judith, 2019. "Efficient integration of climate and energy policy in Australia’s National Electricity Market," Economic Analysis and Policy, Elsevier, vol. 64(C), pages 178-193.
    11. Ayres, Robert U., 2008. "Sustainability economics: Where do we stand?," Ecological Economics, Elsevier, vol. 67(2), pages 281-310, September.
    12. Kevin Hanslow & Don Gunasekera & Brendan Cullen & David Newth, 2014. "Economic impacts of climate change on the Australian dairy sector," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 58(1), pages 60-77, January.
    13. Alvaro Calzadilla & Katrin Rehdanz & Richard Betts & Pete Falloon & Andy Wiltshire & Richard Tol, 2013. "Climate change impacts on global agriculture," Climatic Change, Springer, vol. 120(1), pages 357-374, September.
    14. Erwin Corong & Thomas Hertel & Robert McDougall & Marinos Tsigas & Dominique van der Mensbrugghe, 2017. "The Standard GTAP Model, version 7," Journal of Global Economic Analysis, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, vol. 2(1), pages 1-119, June.
    15. Andrei Polbin & Sergey Drobyshevsky, 2014. "Developing a Dynamic Stochastic Model of General Equilibrium for the Russian Economy," Research Paper Series, Gaidar Institute for Economic Policy, issue 166P, pages 156-156.
    16. Don Fullerton & Gilbert E. Metcalf, 2002. "Environmental Controls, Scarcity Rents, and Pre-existing Distortions," Chapters, in: Lawrence H. Goulder (ed.), Environmental Policy Making in Economies with Prior Tax Distortions, chapter 26, pages 504-522, Edward Elgar Publishing.
    17. Heindl, Peter & Löschel, Andreas, 2015. "Social implications of green growth policies from the perspective of energy sector reform and its impact on households," CAWM Discussion Papers 81, University of Münster, Münster Center for Economic Policy (MEP).
    18. Vega-Cervera, J.A. & Medina, J., 2000. "Energy as a productive input: The underlying technology for Portugal and Spain," Energy, Elsevier, vol. 25(8), pages 757-775.
    19. Nong, Duy & Nguyen, Duong Binh & Nguyen, Trung H. & Wang, Can & Siriwardana, Mahinda, 2020. "A stronger energy strategy for a new era of economic development in Vietnam: A quantitative assessment," Energy Policy, Elsevier, vol. 144(C).
    20. James A. Giesecke & John R. Madden, 2013. "Evidence-based regional economic policy analysis: the role of CGE modelling," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 6(2), pages 285-301.

    More about this item

    Keywords

    ;
    ;
    ;

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:cop:wpaper:g-243. 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: Mark Horridge or Sam Marginson (email available below). General contact details of provider: https://edirc.repec.org/data/cpmonau.html .

    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.