GTAP Resources: Resource Display
| GTAP Resource #7150 |
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"Declining demand for Australia’s fossil fuel exports, potential economic impacts, and policy responses" by Hodges, Cedric Abstract Fossil fuels account for over one-quarter of Australia’s merchandise exports, and a global shift to decarbonisation could see demand contract considerably. The potential impact of contracting demand for fossil fuels on the Australian economy is not well understood – existing literature has focussed on particular countries’ decarbonisation efforts or their global effects. Studies rarely isolate the impacts of foreign demand contractions, or the results are presented at a macroeconomic level. To assess the impact of declining global demand for Australia’s fossil fuel exports we develop a Computable General Equilibrium (CGE) model of the Australian economy that includes fossil-fuel-producing sectors, workers, and households. We use this model to demonstrate the potential impact of a negative shock to fossil fuel demand that is consistent with announced climate policies of our major trading partners. We find that the shock does not impose a significant cost on the Australian economy, but this hides a very large impact at the household and worker level. Positive shifts in demand for commodities that will be used in global decarbonisation (such as lithium), and policy responses are examined. We find a combination of growth in emerging industries and direct assistance is required to offset the impacts to affected households and the broader economy. |
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- Model extension/development - Climate change policy - Labor market issues - Oceania |
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Last Modified: 9/15/2023 2:05:45 PM
