Employing a CGE model in analysing the environmental and economy-wide impacts of CO2 emission abatement policies in Malaysia

Masoud Yahoo, Jamal Othman

Research output: Contribution to journalArticle

8 Citations (Scopus)

Abstract

The impact of global warming has received much international attention in recent decades. To meet climate-change mitigation targets, environmental policy instruments have been designed to transform the way goods and services are produced as well as alter consumption patterns. The government of Malaysia is strongly committed to reducing CO2 gas emissions as a proportion of GDP by 40% from 2005 levels by the year 2020. This study evaluates the economy-wide impacts of implementing two different types of CO2 emission abatement policies in Malaysia using market-based (imposing a carbon tax) and command-and-control mechanism (sectoral emission standards). The policy simulations conducted involve the removal of the subsidy on petroleum products by the government. A carbon emission tax in conjunction with the revenue neutrality assumption is seen to be more effective than a command-and-control policy as it provides a double dividend. This is apparent as changes in consumption patterns lead to welfare enhancements while contributing to reductions in CO2 emissions. The simulation results show that the production of renewable energies is stepped up when the imposition of carbon tax and removal of the subsidy is augmented by revenue recycling. This study provides an economy-wide assessment that compares two important tools for assisting environment policy makers evaluate carbon emission abatement initiatives in Malaysia.

Original languageEnglish
Pages (from-to)234-243
Number of pages10
JournalScience of the Total Environment
Volume584-585
DOIs
Publication statusPublished - 15 Apr 2017

Fingerprint

Carbon
Taxation
pollution tax
carbon emission
Petroleum products
Global warming
Gas emissions
Gross Domestic Product
Climate change
simulation
Recycling
global warming
transform
recycling
petroleum
market
economy
policy
gas
energy

Keywords

  • Carbon tax
  • CGE modelling
  • Command-and-control
  • Environmental effects
  • Hicksian welfare

ASJC Scopus subject areas

  • Environmental Engineering
  • Environmental Chemistry
  • Waste Management and Disposal
  • Pollution

Cite this

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