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GTAP Resource #4747

"Assessing the Impact of a Carbon Tax in Ukraine"
by Frey, Miriam

With 0.98 kilograms CO2/USD (PPP, 2005 prices) in 2011 Ukraine has one of the highest levels of CO2 emissions per GDP in the world. However, the country committed itself to reduce emissions from stationary sources by 10% until 2015. To this end, the Ukrainian government passed a law to impose a carbon tax on the use of energy commodities in production. The tax was first levied in 2011 with a starting value of 0.1 Ukrainian Hryvnia (UAH)/ton of CO2 and was gradually increased resulting in a current tax level of 0.26 UAH/ton of CO2 (0.02 USD/ton of CO2). Against this background the questions arise 1) whether such a low tax level can be expected to have any impact on CO2 emissions at all and 2) which tax level would be consistent with the policy goal of a 10% emission reduction. Thus, using a static computable general equilibrium (CGE) model for Ukraine, this paper assesses the impact of different carbon tax levels on changes in CO2 emissions, GDP and welfare. Special focus is thereby given to the substitution possibilities between energy commodities used in production. Accordingly, the economic data is complemented by detailed data on intermediate and final use of energy commodities and CO2 emissions from fuel combustion. The results confirm that the current tax level does not result in a significant decrease of CO2 emissions in Ukraine. In order to achieve the reduction target a carbon tax of around 40 UAH/ton of CO2 would be necessary. Although this tax level would be much higher than the current one, it would still be in the lower range of other existing carbon taxes. Assuming that the additional tax revenue is recycled through a reduction of the indirect tax rate, we can even constitute a welfare increase for three out of four household types and a small rise in real GDP indicating the existence of a double dividend....

Resource Details (Export Citation) GTAP Keywords
Category: 2015 Conference Paper
Status: Published
By/In: Presented at the 18th Annual Conference on Global Economic Analysis, Melbourne, Australia
Date: 2014
Created: Frey, M. (4/15/2015)
Updated: Frey, M. (4/15/2015)
Visits: 2,611
- Baseline development
- Climate change policy
- Climate impacts
- Commonwealth of Independent States

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