The Role of Electricity for the Decarbonization of the Portuguese Economy - DGEP Technical Report

Pereira, Alfredo and Pereira, Rui (2017): The Role of Electricity for the Decarbonization of the Portuguese Economy - DGEP Technical Report.

Abstract

The objective of this work is to examine the environmental, economic, and distribution effects of carbon taxation and environmental tax reform policies in Portugal. Decarbonization of the Portuguese economy will necessarily be based on an increasing electrification of energy demand and the production of electricity from renewable energy resources. Carbon and energy pricing policies coupled with appropriate recycling of the carbon tax revenues can contribute towards the decarbonization of the Portuguese economy and an increase in the use of renewable energy resources in the production of electric power. In this work we provide full details as to the model, calibration, and simulation results within the economic framework of the DGEP model.

• Item Type: MPRA Paper
• Language: English
• Keywords: economic effects, distributional effects, electrification, decarbonization, carbon taxation, Portugal
• Subjects: C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C68 - Computable General Equilibrium Models; H - Public Economics > H2 - Taxation, Subsidies, and Revenue; O - Economic Development, Innovation, Technological Change, and Growth > O5 - Economywide Country Studies; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q4 - Energy > Q43 - Energy and the Macroeconomy; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics

References

1. Agência Portuguesa do Ambiente, 2017. http://www.apambiente.pt

2. Aspalter, Lisa. 2016. Estimating Industry-level Armington Elasticities for EMU Countries. Vienna University of Economics and Business Working Paper no. 217

3. Beck, Marisa, Nichoas Rivers, Randall Wigle, and Hidemichi Yonezawa. 2015. Carbon tax and revenue recycling: Impacts on households in British Columbia. Resource and Energy Economics. 41: 40-69.

4. Bohringer, Christoph, Thomas Rutherford, Nicholas Rivers, and Randall Wigle. 2012. Green Jobs and Renewable Electricity Policies: Employment Impacts in Ontario's Feed-in Tariff. The B.E. Journal of Economic Analysis & Policy. 12: 1-40.

5. Bureau, Benjamin. 2011. Distributional effects of a carbon tax on car fuels in France. Energy Economics. 33: 121-130

6. Callan, Tim, Sean Lyons, Susan Scott, Richard Tol, and Stefano Verde. 2009. The Distributional Implications of a Carbon Tax in Ireland. Energy Policy 37: 407-412

7. Chiroleu-Assouline, Mireille and Mouez Fodha. 2014. From regressive pollution taxes to progressive environmental tax reforms. European Economic Review. 69: 126-142.

8. Cullenward, Danny, Jordan Wilkerson, Michael Wara and John Weyant. 2016. Dynamically estimating the distributional impact of U.S. climate policy with NEMS: A case study of the Climate Protection Act of 2013. Energy Economics. 55: 308-318

9. Dissou, Yazid and Muhammad Shahid Siddiqui. 2014. Can carbon taxes be progressive? Energy Economics 42: 88-100

10. Frondel, Manuel. Nolan Ritter, Christoph Schmidt, and Colin Vance. 2010. Economic Impacts from the Promotion of Renewable Energy Technologies: The German Experience. Energy Policy. 38:4048-4056

11. Fullerton, Don and Garth Heutel. 2007. The General Equilibrium Incidence of Environmental Taxes. Journal of Public Economics p. 571-591

12. Fullerton, Don and Garth Heutel. 2010. Analytical General Equilibrium Effects of Energy Policy on Output and Factor Prices. NBER Working Paper Series Working Paper 15788

13. Fullerton, Don, Garth Heutel and Gilbert Metcalf. 2011. Does the Indexing of Government Transfers Make Carbon Pricing Progressive. CESifo Working Papers Working Paper No. 3315

14. Fullerton, Don. 2008. Distributional Effects of Environmental and Energy Policy: An Introduction. NBER Working Paper Series Working Paper 14241

15. Galinato, Gregmar and Jonathan Yoder. 2010. An integrated tax-subsidy policy for carbon emission reduction.Resource and Energy Economics. 32: 310-326

16. Gonand, Frederic and Pierre-Andre Jouvet. 2015. The "second dividend" and the demographic structure. Journal of Environmental Economics and Management. 72: 71-97

17. Gonzalez, Fidel. 2012. Distributional effects of carbon taxes: The case of Mexico. Energy Economics. 34: 2102-2115

18. Goulder, Lawrence, Marc Hafstead, and Roberton Williams III. General Equilibrium Impacts of a Federal Clean Energy Standard.

19. Goulder, Lawrence. 2013. Climate change policy's interactions with the tax system. Energy Economics. 40:S3- S11.

20. Grainger, Corbett and Charles Kolstad. 2008. Who Pays for a Carbon Tax.

21. Granade, H, J, Creyts, A. Derkach, P. Farese, S. Nyquist, and K, Ostrowsly. 2009. Unlocking Energy Efficiency in the U.S. Economy. McKinsey Global Energy and Materials.

22. IEA - International Energy Agency (2016), World Energy Outlook 2016, Paris.

23. Jiang, Zhujun and Shuai Shao. 2014. Distributional effects of a carbon tax on Chinese households: A case of Shanghai. Energy Policy. 73: 269-277

24. Kalkuhl, Matthias, Ottmar Edenhofer, and Kai Lessmann. 2013. Renewable energy subsidies: Second-best policy or fatal aberration for mitigation? Resource and Energy Economics. 35:217-234

25. Kallbekken, Steffen, Stephan Kroll and Todd Cherry. 2011. Do you not like Pigou, or do you not understand him? Tax aversion and revenue recycling in the lab. Journal of Environmental Economics and Management. 62:53-64

26. Mathur, Aparna and Adele Morris. 2012. Distributional Effects of a Carbon Tax in Broader U.S. Fiscal Reform. Energy Policy. 66: 326-334

27. Meltzer, Joshua. 2014. A Carbon Tax as a Driver of Green Technology Innovation and the Implications for International Trade.

28. Parry, Ian and Roberton Williams III. 2010. What are the Costs of Meeting Distributional Objectives for Climate Policy? NBER Working Paper Series. Working Paper 16486

29. Pereira, A., and R. Pereira (2012). DGEP - A dynamic general equilibrium model of the Portuguese economy: model documentation. The College of William and Mary, Working Paper 127 (Revised 2014).

30. Pereira, A., and R. Pereira (2014a). Environmental Fiscal Reform and Fiscal Consolidation: The Quest for the Third Dividend in Portugal. Public Finance Review 42(2): 222-253.

31. Pereira, A., and R. Pereira (2014b). On the environmental, economic and budgetary impacts of fossil fuel prices: A dynamic general equilibrium analysis of the Portuguese case. Energy Economics 42(C): 248-261.

32. Pereira, A., and R. Pereira (2016a). Marginal Abatement Cost Curves and the Budgetary Impact of CO2 Taxation in Portugal, Environmental and Resource Economics, forthcoming, available online.

33. Pereira, A., and R. Pereira (2016b). On the Relative Roles of Fossil Fuel Prices, Energy Efficiency, and Carbon Taxation in Reducing Carbon Dioxide Emissions: The Case of Portugal. Journal of Environmental Planning and Management, forthcoming, available online.

34. Pereira, A., and P. Rodrigues (2002). On the Impact of a Tax Shock in Portugal. Portuguese Economic Journal 1(3): 205-236.

35. Pereira, A., and P. Rodrigues (2004). Strategies for fiscal reform in the context of the EMU: the case of Portugal. Review of Development Economics 8(1): 143-165.

36. Pereira, A., and P. Rodrigues (2007). Social Security Reform in Portugal: A Dynamic General Equilibrium Analysis. Portuguese American Development Foundation, Lisbon.

37. Rausch, Sebastian and Giacomo Schwarz. 2016. Household heterogeneity, aggregation, and the distributional impacts of environmental taxes. Journal of Public Economics 138: 43-57

38. Rausch, Sebastian and M. Mowers. 2014. Distributional and Efficiency Impacts of Clean and Renewable Energy Standards for Electricity. Resource and Energy Economics. 36: 556-585

39. Rausch, Sebastian, Gilbert Metcalf and John Reilly. 2011. Distributional Impacts of Carbon Pricing: A General Equilibrium Apprach with Micro-Data for Households. NBER Working Paper Series Working Paper 17087

40. Rausch, Sebastian, Gilbert Metcalf, John Reilly, and Sergey Paltsev. 2009. Distributional Impacts of a U.S. Greenhouse Gas Policy: A General Equilibrium Analysis of Carbon Pricing. MIT Joint Program on the Science and Policy of Global Change Report no. 182