Socio-economic and environmental impact of Intended decarbonization policies in the East Asia region

Given the rising levels of carbon emissions, governments in the East Asia region are exploring effective decarbonization policies. This study examines the socio-economic and environmental implications of these policies using a closed-loop multi-country computable general equilibrium model that captures key linkages between the economy and climate change. Our findings suggest that the intended decarbonization policy, aimed at accelerating technology transfer, may not always reduce carbon emissions. However, incorporating Carbon Capture and Storage (CCS) technology into existing coal power plants and implementing a carbon tax could significantly reduce carbon emissions in all countries in the region. The paper suggests implementing carbon tax policy to reduce carbon emissions, retrofitting CCS technology in coal-based electricity power plants, and developing renewable electricity at the same time as controlling emissions from non-renewable energy. These policies, however, need some supplement policy strategies to compensate for the potential output contraction due to the tax.