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GTAP Resource #6976

"Energy Efficiency of Carbon-dioxide Emission Nexus in the EU: Assessing the Effect of Carbon Border Adjustment Mechanism on Carbon-dioxide Emission Reduction Using the GTAP-E Model "
by Kitetu, Geoffrey M. and Jong Hwan Ko


Abstract
Carbon leakage remains a matter of concern in environmental and climate policy formulation. One policy option to address carbon leakage is carbon tax which has remained contentious. For instance, the EU's intention to introduce a carbon tax through the Carbon Border Adjustment Mechanism (EU-CBAM) has raised serious concerns among the EU's trading partners, among them the least developing countries (LDCs) and middle-income countries (MICs). This study aims to assess the impact of the EU-CBAM on the EU's trading partners by income, focusing on the LDCs and the MICs using the GTAP-E: an Energy-Environment model and the current GTAP database, version 10.1, with the base year of 2014. For the relevance of this research, we map the GTAP database into data for 24 regions in 24 sectors. The business as usual (BAU) scenario involves model adjustments to 2021 using macroeconomic variables, which include GDP, population, skilled labor, unskilled labor, and capital stock. The study implements two policy scenarios using the ad valorem carbon tax equivalents estimated using the input-output (I-O) model. The novelty of our study is in the assessment of the impact of the EU-CBAM on efficiency in energy production processes, the evaluation of carbon embedded in exports to the EU27, the estimation of ad valorem equivalents of CBAM (carbon tax), and the economy-wide impact of CBAM on the EU27 and its trading partners classified according to income level.


Resource Details (Export Citation) GTAP Keywords
Category: Other CGE Application
Status: Not published
By/In:
Date: 2023
Version:
Created: Kitetu, G. (4/15/2023)
Updated: Batta, G. (5/7/2023)
Visits: 466
- Model validation and sensitivity analysis
- Climate change policy
- Environmental policies
- Domestic policy analysis
- Economic development
- Africa (Central)
- Africa (East)
- Africa (North)
- Africa (Southern)
- Africa (West)
- Asia (East)
- Asia (South-Central)
- Asia (Southeast)
- Caribbean
- Central America
- Commonwealth of Independent States
- European Union
- South America


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