Carbon policy and economy Modelling framework Scenarios Results Summary

Economic Impacts of Carbon Reduction Policies

Maksym Chepeliev

Institute for Economics and Forecasting, Ukrainian NAS

chepeliev@ief.org.ua

May 19, 2015

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Carbon policy and economy Modelling framework Scenarios Results Summary

Outline

1 Carbon policy and economy

2 Modelling framework

3 Investigated scenarios

4 Modelling results

5 Summary

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Carbon policy and economy Modelling framework Scenarios Results Summary

E�ects of carbon tax on labor, investments and output:common view

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Carbon policy and economy Modelling framework Scenarios Results Summary

Multiple dividends of carbon policies

Key drivers:

Revenue redistribution approach.

The time frame of analysis.

Climate and health bene�ts.

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Carbon policy and economy Modelling framework Scenarios Results Summary

What is CGE model?

Computable general equilibrium (CGE) is a modelling framework

that includes:

producers that are maximizing pro�ts and minimizing costs;

households that are maximizing utility by choosing

consumption volumes based on price signals;

markets, which balance supply and demand for each product;

other economic agents: Government, investors, security funds

etc.

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Carbon policy and economy Modelling framework Scenarios Results Summary

CGE model for Ukraine: key features

Recursive-dynamic.

Has updated base year 2015.

Includes multiple (structural) benchmark scenarios to the year2050.Incorporates heterogeneous households di�erentiated byincome level (10 groups).

Producers are disaggregated into 40 economic activities.

Has separate treatment of Government budget, Retirementfund and di�erent Social security funds.

Special representation of energy subsidies.

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Carbon policy and economy Modelling framework Scenarios Results Summary

CGE model for Ukraine: circular �ow

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Carbon policy and economy Modelling framework Scenarios Results Summary

Simulation procedure

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Carbon policy and economy Modelling framework Scenarios Results Summary

Benchmark macroeconomic assumptions

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Carbon policy and economy Modelling framework Scenarios Results Summary

Carbon policy scenario

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Carbon policy and economy Modelling framework Scenarios Results Summary

Macroeconomic e�ects

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Carbon policy and economy Modelling framework Scenarios Results Summary

Sectoral e�ects

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Carbon policy and economy Modelling framework Scenarios Results Summary

Additional scenario (no technological change)

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Carbon policy and economy Modelling framework Scenarios Results Summary

Summary

Key role of technological changes.

E�ciency of proposed redistribution scheme.

Structural shifts in the national economy.

Residential energy saving and e�ciency.

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Carbon policy and economy Modelling framework Scenarios Results Summary

Thank you!

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