addressing leakage in the eu ets border adjustment or output based allocation the eu ets has been criticised for threatening the competitiveness of european industry and generating carbon leakage i e increasing foreign greenhouse gas emissions two main options have been put forward to tackle these concerns border adjustments and output based allocation i e allocation of free allowances in proportion to current production we compare various configurations of these two options as well as a scenario with full auctioning and no border adjustment against this background we develop a model of the main sectors covered by the eu ets electricity steel cement and aluminium we conclude that the most efficient way to tackle leakage is auctioning with border adjustment which generally induces a negative leakage a spillover this holds even if the border adjustment does not include indirect emissions if it is based on eu rather than foreign specific emissions or for some values of the parameters if it covers only imports another relatively efficient policy is to combine auctioning in the electricity sector and output based allocation in exposed industries especially if free allowances are given both for direct and indirect emissions i e those generated by the generation of the electricity consumed although output based allocation is generally less effective than border adjustment to tackle leakage it is more effective to mitigate production losses in the sectors affected by the ets which may ease climate policy adoption c 2011 elsevier b v all rights reserved

armington elasticities for energy policy modeling evidence from four european countries elasticities of substitution among imports and competing domestic production armington elasticities play an important role in computable general equilibrium cge assessments of energy and climate policy this paper provides estimates of armington elasticities for 15 commodity groups in four european countries since armington elasticities are found to be rather low on average researchers may want to reconsider the device of using high values of armington elasticities in cge models to avoid unrealistic competitiveness effects or emission leakage rates associated with energy or carbon taxes or other forms of energy related regulation estimated elasticities tend to be higher in the case of machinery and other investment goods than in the case of primary products ores and chemicals as well as consumer goods

the effect of industry delocalization on global energy use a global sectoral perspective abstract sectoral production technologies differ largely across countries so do sectoral energy intensities hence shifts in production locations within global sectors possibly caused by environmental regulations are likely to have an impact on aggregated energy usage and emissions applying a logarithmic mean divisia index decomposition we decompose changes of sectoral energy use from 2001 2011 into three effects sectoral value added energy efficiency and delocalization which in this paper is conceived as a structural effect within sectors between regions our results show that although economic activity and technological progress dominate global energy use developments for most sectors a delocalization towards less efficient production places is ongoing it contributes to annual increases in energy use in the range of 1 6 especially manufacturing sectors which are among the most energy consuming sectors reveal significant increases in energy usage due to delocalization since 2004 this development is accompanied by declining energy intensity improvement rates indicating that delocalization induces second order effects

estimating elasticities of substitution with nested ces production functions where do we stand abstract prompt by an increasing interest by climate change modelers a rich literature estimating elasticities of substitution in a nested ces production framework has recently developed this article reviews such literature we critically describe the nesting structures estimation approaches data sources and aggregation econometric techniques and types of substitution elasticities used by previous literature to offer a comprehensive description of the various options available to a researcher attempting this estimation we also provide suggestions for potential improvements to the estimation process in particular we warn researchers to use ces production functions with caution in empirical applications given their restrictive build in assumptions

trading for the future signaling in permit markets abstract permit markets are celebrated as a policy instrument since they allow i firms to equalize marginal costs through trade and ii the regulator to distribute the burden in a politically desirable way these two concerns however may conflict in a dynamic setting anticipating the regulator s future desire to give more permits to firms that appear to need them firms purchase permits to signal their need this raises the price above marginal costs and the market becomes inefficient if the social cost of pollution is high and the government intervenes frequently in the market the distortions are greater than the gains from trade and non tradable permits are better the analysis helps to understand permit markets and how they should be designed

long run equilibrium modeling of emissions allowance allocation systems in electric power markets carbon dioxide allowance trading systems for electricity generators are in place in the european union and in several u s states an important question in the design of such systems is how allowances are to be initially allocated by auction by giving away fixed amounts grandfathering or by allocating based on present or recent output investment or other decisions the latter system can bias investment operations and product pricing decisions and increase costs relative to the other systems a nonlinear complementarity model is proposed for investigating the long run equilibria that would result under alternative systems for power markets characterized by time varying demand and multiple technology types existence of equilibria is shown under mild conditions solutions for simple systems show that allocating allowances to new capacity based on fuel use or generator type can yield large distortions in capacity investment invert the operating order of power plants and inflate consumer costs the distortions can be smaller for tighter co2 restrictions and are somewhat mitigated if there is also a market for electricity capacity or minimum run restrictions on coal plants distortions are also less if allowances are allocated to plants in proportion to sales rather than capacity

an analysis of the economic determinants of energy efficiency in the european iron and steel industry abstract the iron and steel industry has some of the highest levels of carbon emissions and energy consumption in europe at the same time this sector is of great economic importance for the european union in this paper we investigate the technological market and policy factors that are associated with a reduction in the specific energy consumption in iron and steel production in addition we analyze whether achieving more environmentally friendly production is accompanied by a decrease or an increase in production levels we base our analysis on technical information about cost factors of steel production routes historical data for prices of energy carriers on prices for the feedstock in the iron and steel sector on political framework conditions and the demand for steel as we find out higher energy prices tend to raise energy efficiency or tend to reduce specific energy consumption in the steel sector yet because lower specific energy consumption is related to higher total steel production energy price increases might cause a kind of rebound effect bringing about an increase in total production as a consequence of induced energy efficiency improvements taking this effect into account the negative relation between input prices and total steel production is not very strong in the short run the wages of employees in the steel sector tend to have the biggest influence on total steel production in the long run gdp and investment climate exert the biggest influence

climate policy and fiscal constraints do tax interactions outweigh carbon leakage climate policymaking faces twin challenges of carbon leakage and public sector revenue requirements a large literature advocates the use of carbon dioxide co2 pricing and recycling the revenues to lower distorting taxes as a way to minimize costs in this paper we explore the implications of labor tax interactions for the cost effectiveness of border adjustments and other measures to cope with leakage we find that for plausible values of labor supply elasticities the cost savings from revenue recycling are significant from 15 to 25 percent the cost savings from anti leakage measures are generally smaller but also significant particularly for small coalitions or more binding reduction targets tax interactions further enhance the cost savings from border adjustments but make other measures like rebates or exemptions less attractive

benchmarking in the european union emissions trading system abatement incentives abstract this paper investigates abatement incentives for allowance allocation based on output and sector specific benchmarks here called output based allocation or benchmarking special attention is given to updated allocation and we assume that allowances can be traded with other sectors open cap we confirm earlier studies that output based allocation based on ex ante data provide the same abatement incentives as auction or grandfathering and also confirm that output based allocation with updated output and ex ante benchmarks provides as high abatement incentives as auction but constitutes a production subsidy however we also find that benchmarking with updated output and updated benchmarks reduces abatement incentives somewhat but less so than updated grandfathering an allocation rule where the sector cap is prescribed ex ante for instance based on historic emissions and distributed to installations in proportion to their updated production preserves full abatement incentives and avoids some of the costs associated with the determination of benchmarks however this rule also constitutes a production subsidy which decreases with industry concentration if a sector is split into smaller groups each with one benchmark per sub sector benchmarking evolves toward grandfathering since benchmarking is conditioned on production this allocation method protects production from leakage i e migrating to areas where firms face no emissions cost this may actually be the most compelling reason for choosing benchmarking

output based allocations and revenue recycling implications for the new zealand emissions trading scheme abstract the new zealand emissions trading scheme nz ets is more comprehensive in its coverage of emissions than schemes introduced or proposed to date in any other country in that it includes agricultural greenhouse gases which account for half of new zealand s total emissions but motivated by concerns for the international competitiveness of emissions intensive trade exposed industrial and agricultural activities current legislation provides for substantial ongoing free allocations to such activities linked to their output here we use a computable general equilibrium model to analyse the impacts of output based allocation given the possibility of recycling net revenues to reduce prior distorting taxes unlike previous modelling studies of alternative nz ets designs we allow for a more realistic modelling both of capital and labour supply we find that as suggested by theoretical results interactions between the ets and existing taxes are important given any level of output based allocation the negative macroeconomic impacts can be reduced by recycling net revenues as efficiently as possible less obviously we find that there may be an optimal non zero level of output based allocation this optimal level increases as the carbon price and or factor supply elasticities increase but decreases if revenues are recycled with greater efficiency

mitigation of adverse effects on competitiveness and leakage of unilateral eu climate policy an assessment of policy instruments the european union eu has developed a strategy to mitigate climate change by cutting greenhouse gas ghg emissions and fostering low carbon technologies however the risk of implementing unilateral policies is that distortive effects are generated at the global scale affecting world energy prices international competitiveness and the geographical allocation of carbon intensive production processes using a dynamic cge model we assess the rate of carbon leakage and adverse impacts on competitiveness in a number of scenarios over the period 2010 2050 according to the model results we highlight two major issues first in the case of a unilateral eu climate policy carbon leakage and negative effects on competitiveness are quite serious anti leakage measures can only mitigate leakage and adverse economic impacts on competitiveness in a limited way on the contrary an optimality analysis addressing the environmental effectiveness cost effectiveness and political feasibility of alternative policy solutions reveals that the eu long term decarbonisation strategy by investing in energy efficiency and renewable energy might ensure protection of vulnerable manufacturing activities while enhancing the competitiveness of technologically advanced industries

an assessment of a proposed ets in australia by using the monash green model abstract using the monash green model and a database containing detailed energy sectors this paper evaluates the effects of a proposed emissions trading scheme on the australian economy and the emissions levels the simulation results indicate that the price of carbon permits has to increase from a 4 1 per tonne in 2015 through a 13 1 per tonne in 2020 to a 41 3 per tonne in 2030 to achieve a target of 28 below the 2005 level in 2030 the main buyers of permits would be the agricultural sector black coal electricity sector and brown coal electricity sector compared to the business as usual scenario australia s gdp is projected to be 0 85 lower in 2020 and 1 6 lower in 2030 household welfare measured in terms of equivalent variations will increase due to compensations provided by the government the results also lend strong support towards the transition to renewable energy the stylised model was adapted to inform the results of the full model

where are the industrial technologies in energy economy models an innovative cge approach for steel production in germany top down computable general equilibrium cge models are used extensively for analysis of energy and climate policies energy intensive industries are usually represented in top down economic models as abstract economic production functions commonly of the constant elasticity of substitution ces or translog functional form this study explores methods for improving the realism of energy intensive industries in top down economic models we replace a ces production function with a set of specific technologies and provide a comparison between the traditional production function approach in cge models and an approach with separate technologies for making iron and steel in particular we investigate the response of the iron and steel sector to a set of co2 price scenarios our technology based integrated approach permits a choice between several technologies for producing iron and steel and allows for shifts in technology characteristics over time towards best practice innovative technologies in addition the general equilibrium framework allows us to analyze interactions between production sectors for example between electricity generation and iron and steel production investigate simultaneous economy wide reactions and capture the main driving forces of greenhouse gas emissions reductions under a climate policy we conclude that technology specific effects are crucial for the economic assessment of climate policies in particular the effects relating to process shifts and fuel input structure

eu climate policy up to 2020 an economic impact assessment in its fight against climate change the eu is committed to reducing its overall greenhouse gas emissions to at least 20 below 1990 levels by 2020 to meet this commitment the eu builds on segmented market regulation with an eu wide cap and trade system for emissions from energy intensive installations ets sectors and additional measures by each eu member state covering emission sources outside the cap and trade system the non ets sector furthermore the eu has launched additional policy measures such as renewable energy subsidies in order to promote compliance with the climate policy target basic economic reasoning suggests that emission market segmentation and overlapping regulation can create substantial excess costs if we focus only on the climate policy target in this paper we evaluate the economic impacts of eu climate policy based on numerical simulations with a computable general equilibrium model of international trade and energy use our results highlight the importance of initial market distortions and imperfections as well as alternative baseline projections for the appropriate assessment of eu compliance cost

differentiated products increasing returns to scale and heterogeneous firms in a cge model of the australian coal sector we use a computable general equilibrium cge model to re evaluate the effects of the introduction of a tax on co2 emissions in australia after incorporating a number of important aspects of australian coal production while other studies for example commonwealth of australia 2008a clarke and waschik 2012 model coal as a single aggregate sector we disaggregate coal into black and brown coals brown coal is non traded while most black coal is exported and brown coal has a higher emission intensity than black coal coal is a differentiated product whose production is characterized by the existence of very large fixed costs and considerable differences in the ratio of capital expenditures to capacity between coal mines so we use balistreri and rutherford 2012 and melitz 2003 to incorporate increasing returns to scale production technology and heterogeneous productivities between monopolistically competitive coal firms we find that while the aggregate effects of achieving a given level of abatement are largely unaffected by disaggregation of coal the effects within the black and brown coal sectors are very different the introduction of increasing returns to scale and heterogeneous firms does have important effects on the aggregate welfare costs of achieving a given level of abatement when monopolistically competitive coal producers face more inelastic demand welfare costs rise firm exit falls and the carbon price needed to achieve a given level of abatement falls

emissions trading with updated allocation effects on entry exit and distribution allocation of emissions allowances may have significant distributional and efficiency effects it is well known that cost efficiency may be achieved if allowances are auctioned or distributed in a lump sum manner e g based on emissions levels before the start of the system grandfathering bohringer and lange eur econ rev 49 2041 2055 2005 show that a cost effective outcome can also be achieved if the base year for allocation is continually updated updating given that banking and borrowing are prohibited in this paper we examine whether updating alters the entry and exit conditions for firms compared to grandfathering and how it affects profits for new and existing firms we find that the two schemes function surprisingly similar first the incentives to entry and exit are identical second the total value of free quotas to existing firms based on emissions before the system starts is also identical without any auctioning with updating initial claims for free allowances have a shorter lifetime compared to grandfathering but quota prices are higher as firms anticipate the effect of current emissions on future claims to free allowances the two effects exactly cancel each other out if there is some combination of auction and free allocation the total value of free quotas will always be highest under grandfathering if the auction rate is the same entry and exit incentives are still equal

exploring the impacts of regional unbalanced carbon tax on co_2 emissions and industrial competitiveness in liaoning province of china carbon tax is regarded as a useful policy instrument to achieve the environmental target efficiently however the effect of regional unbalanced carbon tax is still unknown in this study an improved two region computable general equilibrium cge model is developed to fill this research gap with liaoning province and the rest of china roc as the study area business as usual bau and nine carbon tax scenarios are designed results show that in 2030 the highest carbon tax of 221 usd ton co 2 in taxc4p8 scenario in liaoning province will lead to carbon reduction of 44 92 with the cost of 5 54 gross domestic product gdp loss price effect and scale effect are the two mechanisms that affect the changes in gdp industrial output and co 2 emissions industrial structure energy consumption and carbon intensity of liaoning are overwhelmingly affected by the price effect most less energy intensive industries belong to the winner industries due to the higher influence of domestic market by contrast loser industries including most of the energy intensive industries are mainly affected by the changes of provincial and international markets roc region is mainly affected by the price effect suggestions about preferential developmental industries are offered to balance the environmental and economic concerns

what are the impacts of climate policies on trade a quantified assessment of the paris agreement for the g20 economies abstract following the paris agreement climate policies have been developing rapidly consequently affecting all economic agents to this extent trade implications and competitiveness effects have been of prime concern to energy and climate policy makers in this study we employ the gem e3 hybrid cge model to quantify the regional and sectoral trade impacts of climate mitigation scenarios in line with the paris agreement we assess a global implementation of ndcs and a global mitigation action consistent with the 2 c target the scenarios differ in both effort sharing and mitigation stringency yet we find a reduction of global trade activity under both policy regimes the key driver is the sharp decline of global demand for fossil fuels fossil fuels a highly traded good are substituted by domestically produced goods like electricity or by capital equipment that is traded with lower intensity decarbonization policies have an important impact on trade flows affected by the relative stringency of action and the key characteristics of the regional economies we identify regions that benefit from the emergence of new markets for clean energy goods contrary to the fossil fuel exporters as well as regions that achieve a comparative advantage due to their preparedness from early mitigation action

asymmetric industrial energy prices and international trade this paper measures the response of bilateral trade flows to differences in industrial energy prices across countries using a panel for the period 1996 2011 including 42 countries 62 sectors and covering 60 of global merchandise trade we estimate the short run effects of sector level energy price asymmetry on trade we find that changes in relative energy prices have a statistically significant but very small impact on imports on average a 10 increase in the energy price difference between two country sectors increases imports by 0 2 the impact is larger for energy intensive sectors even in these sectors however the magnitude of the effect is such that changes in energy price differences across time explain less than 0 01 of the variation in trade flows simulations based on our model predict that a 40 65 tco2 price of carbon in the eu ets would increase europe s imports from the rest of the world by less than 0 05 and decrease exports by 0 2

seigniorage and the case for national money in countries with high rates of inflation there is typically movement away from the use of the local currency the paper analyzes the costs and benefits of using a local currency with emphasis on the seigniorage foregone by using a foreign money even if it should be desirable for a country to fix its exchange rate it still loses seigniorage if it does not use its own money the case for using a foreign money then turns largely on the superior discipline imposed on domestic policymakers by removing their control over the money supply alternative methods of imposing discipline are discussed estimates of the amount of seigniorage raised by different governments are presented seigniorage amounts in some cases to about 10 percent of government revenue estimates are also presented of both the annual flow and one time stock costs of giving up use of domestic currencies and instead using the dollar the flow cost is typically about 1 percent of gnp and the stock cost is around 10 percent of gnp

the effect of allowance allocations on cap and trade system performance abstractan implication of the coase theorem is that under certain conditions the market equilibrium in a cap and trade system will be cost effective and independent of the initial allocation of tradable rights that is the overall cost of achieving a given aggregate emission reduction will be minimized and the final allocation of permits will be independent of the initial allocation we call this the independence property this property is important because it means that the government can establish the overall pollution reduction goal for a cap and trade system by setting the cap and leaving it up to the legislature to construct a constituency in support of the program by allocating the allowances to various interests without affecting either the environmental performance of the system or its aggregate social costs we examine the conditions under which the independence property is likely to hold both in theory and in practice

strategic facility location a review abstract facility location decisions are a critical element in strategic planning for a wide range of private and public firms the ramifications of siting facilities are broadly based and long lasting impacting numerous operational and logistical decisions high costs associated with property acquisition and facility construction make facility location or relocation projects long term investments to make such undertakings profitable firms plan for new facilities to remain in place and in operation for an extended time period thus decision makers must select sites that will not simply perform well according to the current system state but that will continue to be profitable for the facility s lifetime even as environmental factors change populations shift and market trends evolve finding robust facility locations is thus a difficult task demanding that decision makers account for uncertain future events the complexity of this problem has limited much of the facility location literature to simplified static and deterministic models although a few researchers initiated the study of stochastic and dynamic aspects of facility location many years ago most of the research dedicated to these issues has been published in recent years in this review we report on literature which explicitly addresses the strategic nature of facility location problems by considering either stochastic or dynamic problem characteristics dynamic formulations focus on the difficult timing issues involved in locating a facility or facilities over an extended horizon stochastic formulations attempt to capture the uncertainty in problem input parameters such as forecast demand or distance values the stochastic literature is divided into two classes that which explicitly considers the probability distribution of uncertain parameters and that which captures uncertainty through scenario planning a wide range of model formulations and solution approaches are discussed with applications ranging across numerous industries

a heuristic algorithm for solving large location inventory problems with demand uncertainty abstract in this paper we analyze a location inventory problem for the design of large supply chain networks with uncertain demand we give a continuous non linear formulation that integrates location allocation and inventory decisions and includes the costs of transportation cycle inventory safety stock ordering and facility opening then relying on the fact that the model becomes linear when certain variables are fixed we propose a heuristic algorithm that solves the resulting linear program and uses the solution to improve the variable estimations for the next iteration in order to show the efficiency of the algorithm we compare our results with those of the conic quadratic formulation of the problem computational experiments show that the heuristic algorithm can be efficiently used to find fast and close to optimal solutions for large supply chain networks finally we provide managerial insights regarding the ways in which demand uncertainty risk pooling and safety stocks at retailers affect the design of a supply chain

the value added of sectoral disaggregation implications on competitive consequences of climate change policies global impact assessment of unilateral climate policies is commonly based on multi sector multi region computable general equilibrium cge models that are calibrated to consistent accounts of production consumption and bilateral trade flows however global economic databases such as gtap treat energy intensive and trade exposed industries rather in aggregate thereby missing potentially important details on the heterogeneity of these sectors in this paper we elaborate on the availability of data resources and methodological issues in disaggregating energy intensive and tradeexposed sectors that receive larger attention in the public policy debate on unilateral emission regulation non ferrous metals iron and steel and non metallic minerals our sensitivity analysis revolves around three types of unobserved heterogeneity at the sub sectoral level trade elasticities energy consumption and technology specifications drawing on the example of border tax adjustments we find that for all given technology specifications and variation in energy shares the biggest differences emerge from variations in armington elasticities even moderate changes in armington elasticities can alter the magnitude and the sign of the effects at the sectoral level the implications of sub sectoral disaggregation are not as pronounced for macroeconomic indicators and leakage as for sectoral indicators

seigniorage and political instability the importance of seigniorage relative to other sources of government revenue differs markedly across countries this paper tries to explain this regularity by studying a political model of tax reform the model implies that countries with a more unstable and polarized political system will have more inefficient tax structures and thus will rely more heavily on seigniorage this prediction of the model is tested on cross sectional data for seventy countries the authors find that after controlling for other variables political instability is positively associated with seigniorage copyright 1992 by american economic association

output based allocations in pollution markets with uncertainty and self selection we study pollution permit markets in which a fraction of permits are allocated to firms based on their output output based allocations which are receiving increasing attention in the design of carbon markets around the world e g europe california new zealand are shown to be optimal under demand and supply volatility despite the output distortions they may create in a market that covers multiple sectors the optimal design combines auctioned permits with output based allocations that are specific to each sector and increasing in its volatility when firms are better informed about the latter or must self select the regulator resort to some free i e lump sum allocations to sort firms out numerical exercises illustrate the policy relevance of our results the gains from considering output based allocations can be substantial

designing climate mitigation policy this us paper provides an exhaustive review of critical issues in the design of climate mitigation policy by pulling together key findings and controversies from diverse literatures on mitigation costs damage valuation policy instrument choice technological innovation and international climate policy the authors begin with the broadest issue of how high assessments suggest the near and medium term price on greenhouse gases would need to be both under cost effective stabilization of global climate and under net benefit maximization or pigouvian emissions pricing the remainder of the paper focuses on the appropriate scope of regulation issues in policy instrument choice complementary technology policy and international policy architectures

the welfare implications of climate change policy abstract the response to three different climate change policies is measured within a general equilibrium model of world output technological change greenhouse gas emissions and climate driven changes in productivity the proposed policies including an approximation to the kyoto protocol are shown to differ greatly in how they mitigate climate change support economic growth and allocate rents across generations benefits of alternative policies relative to the status quo do not necessarily accrue to the generations that bear the costs the results also show that the chosen rent distribution rule has a profound effect on policy evaluation in particular policies which allocate rents on a per capita basis are shown to be systematically welfare preferred to situations where emissions rights are grandfathered to emitting firms this implies that both the optimal level of emissions and the welfare cost of reaching a given target of emissions or atmospheric concentration would be lower under a per capita allocation of emissions permits or carbon tax revenues

robust technology policy against emission leakage the case of upstream subsidies asymmetric regulation of a global pollutant between countries can alter the competitiveness of industries and lead to emissions leakage which hampers countries welfare in order to limit leakage governments consider supporting domestic trade exposed firms by subsidizing their investments in abatement technology the suppliers of such technologies tend to be less than perfectly competitive particularly when both emissions regulations and advanced technologies are new in this context of twin market failures we consider the relative effects and desirability of subsidies for abatement technology we find a more robust recommendation for upstream subsidies than for downstream subsidies downstream subsidies tend to increase global abatement technology prices reduce pollution abatement abroad and increase emission leakage on the contrary upstream subsidies reduce abatement technology prices and hence also emissions leakage

how global climate policy could affect competitiveness a global uniform carbon price would be economically efficient and at the same time avoid carbon leakage still it will affect the competitiveness of specific industries economic activity and employment across countries this paper assesses short term economic shocks following the introduction of a global carbon price that would be in line with the paris agreement based on the world input output database wiod we trace the carbon content of final output through global supply chains this allows us to estimate how prices of the final output would react to the introduction of a global carbon price we find that impacts on industrial competitiveness are highly heterogeneous across regions and economic sectors the competitive position of brazil japan the usa and advanced economies of the eu is likely to improve whereas industries and labor markets in newly industrializing asian economies as well as eastern europe are likely to experience substantial adverse impacts

the effect of globalisation on energy footprints disentangling the links of global value chains abstract this paper investigates the impact of global value chains on energy footprints energy footprints are consumption based indicators which record the energy used to produce a country s final demand in order to disentangle key characteristics of global value chains and their effects on the global energy footprint we employ structural decomposition analyses sda furthermore the analysis combines a retrospective with a prospective sda approach after an analysis of the global energy footprint for the period between 1995 and 2009 we discuss three scenarios of international integration and their implications for energy footprints for the period from 2009 to 2030 our results show that the global energy footprint has increased by 29 4 from 1995 to 2009 and the scenarios indicate that it will increase by another 23 5 until 2030 economic activity is the most important driver for the increase in energy footprints rising final demand alone would have increased the global energy footprint by 47 0 between 1995 and 2009 the composition of countries from where consumption and investment goods come adds another 12 6 sectoral energy intensity reductions are the most important decelerator of energy use 27 8 there is a substantial contribution of changing global value chains on the rise in the global energy footprint 7 5 stronger backward linkages in global value chains increased the global energy footprint by 5 5 between 1995 and 2009 changes in the regional composition of intermediate inputs raised it by another 1 8 the shift of the world economy towards east asia alone would have increased the global energy footprint by 3 0 the sectoral composition of global value chains on the other hand had a negligible effect on energy footprints

revenue raising vs other approaches to environmental protection the critical significance of pre existing tax distortions using analytical and numerical general equilibrium models we show that preexisting factor taxes produce a tax interaction effect that increases the costs of pollution taxes and quotas under policies that raise revenue and recycle it through cuts in marginal factor tax rates this effect is partially offset by a revenue recycling effect grandfathered pollution quotas such as those used under the 1990 clean air act amendments to regulate electric utilities so2 emissions do not benefit from this offset preexisting taxes raise this regulation s cost by over 70 more than half of this additional cost could be avoided by auctioning quotas and exploiting the revenue recycling effect

pollution taxes and revenue recycling abstract discussions of environmental policy and the tax system have emphasized the value of pollution tax revenues which can be used to reduce other tax distortions in the economy however by raising private marginal production costs environmental taxes also tend to reduce gdp and exacerbate the welfare costs of conventional taxes for environmental taxes in consumption goods industries the net welfare change from these two effects is negative unless this good is a relatively weak substitute for leisure an estimate for the optimal pollution tax with full revenue recycling is 63 to 78 of marginal environmental damages

consignment auctions of free emissions allowances abstract while the initial distribution of emissions allowances is usually thought to be independent of the emissions outcome free allocation can affect the efficiency and fairness of allowance trading inefficiency may result from thin allowance markets poor price discovery and regulatory or organizational complexities that hinder the recognition of opportunity costs concerns about fairness may result from intransparency in the process of transferring substantial allowance value we explore the role of consignment auctions in mitigating these concerns these revenue neutral auctions return the financial value of allowances to their original holders while revealing prices and directing allowances to their highest valued use they also can be used to support a minimum price when allowances are freely distributed which may facilitate program linkage consignment auctions have minimal administrative costs and do not necessarily involve government experience indicates that they can play an important role especially in new markets

strategic facility location capacity acquisition and technology choice decisions under demand uncertainty robust vs non robust optimization approaches abstract this paper presents a robust optimization ro modeling approach to develop insights into strategic capacity planning and resource acquisition decisions including the facility location problem and the technology choice problem the main purpose of the proposed model and numerical experiments is to examine the effects of economies of scale economies of scope and the combined effects of scale and scope under uncertain demand realizations using robust optimization the type of capacities or technology alternatives that a firm can acquire can be classified on two basic dimensions the first dimension relates to the effects of scale via distinction between labor intensive technologies and capital intensive technologies the second dimension relates to the effects of scope via distinction between product dedicated and flexible technologies moreover each product dedicated and flexible technology can have different levels of labor or capital intensity leading to the joint effects of economies of scale and economies of scope extensive computational results document how the optimal technology choice patterns depend on the cost structures and levels of model robustness specified to accommodate uncertain demand realizations the results obtained by the two stage robust optimization approach are compared to the results obtained by a non robust approach

switching to carbon free production processes implications for carbon leakage and border carbon adjustment climate policy under partial global compliance raises concerns regarding carbon leakage while border carbon adjustment bca measures are a potential remedy they have also been criticised on various grounds this paper therefore investigates whether a policy fostering the switch to carbon free technologies can substitute for bcas a reason for the effectiveness of a targeted technology policy is that major leakage prone sectors such as iron and steel have two main sources of carbon emissions combustion of fossil fuels and industrial processes while combustion emissions can be reduced relatively easy by increasing energy efficiency reducing process emissions requires a switch to low carbon production processes e g in steel production by deploying electrolysis based on large scale solar electricity we show by means of a multi regional computable general equilibrium analysis that such a switch in steel production technology can eliminate a significant fraction of carbon leakage and also increase sectoral output and welfare since the necessary technologies are not available at large scale yet however are likely to be by 2020 a transitional bca scheme may be a crucial supportive instrument to foster such technology switches yet in the long run bca should be phased out to preserve the incentive for carbon free innovation

output based allocation of emissions permits for mitigating tax and trade interactions the allocation of tradable emissions permits has important efficiency as well as distributional effects when tax and trade distortions are taken into account we compare different rules for allocating carbon allowances within sectors lumpsum grandfathering output based allocation oba auctioning and among sectors historical emissions or value added shares the output subsidies implicit in oba mitigate tax interactions unlike grand fathering oba with sectoral distributions based on value added is similar to revenue recycling with auctioning oba based on historical emissions supports heavier polluters more effectively counter acting carbon leakage but at higher welfare costs less energy intensive sectors are also sensitive to allocation rules

the double dividend hypothesis in a cge model specific factors and the carbon base abstract we use a computable general equilibrium model to empirically examine the double dividend dd hypothesis using the gtap model data for australia we examine three environmental taxes on the production of energy goods following bento and jacobsen 2007 we examine the role played by specific factors in the production of energy goods our results provide support for the existence of a strong dd in australia when revenue is recycled through reductions in consumption taxes the strong dd is larger when the share of specific factors is higher and is much more pronounced when carbon taxes are charged on the production origin based accounting rather than the usage destination based accounting of carbon these results draw attention to the importance of the definition of the carbon base and have implications for the scale of carbon leakage

labor market distortions and welfare decreasing international emissions trading using a multi region multi sector computable general equilibrium model this paper analyzes the effects of international emissions trading iet with a focus on labor market distortions we construct four separate models with several different labor market specifications 1 a model without labor market distortions 2 a model with taxinteraction effects in the labor market 3 a model with a minimum wage and 4 a model in which a wage curve determines wages we use these models to analyze how the effects of iet change according to model specification the main results from the analysis are as follows first we found that iet generates gains for all participants in the model without labor market distortions second even in the models with labor market distortions importers of emissions permits are highly likely to benefit conversely we show that the possibility of a welfare loss from iet is not as small for exporters of permits in particular in the minimum wage and wage curve models we found that the exporters of emissions permits are likely to be disadvantaged however this also depends on the region in question for example china is likely to suffer under iet whereas russia is likely to benefit finally if we implement policies to alleviate labor market distortion simultaneously with emissions regulation all regions receive benefit from iet

a computable general equilibrium model of international sanctions in iran we detail recent international sanctions against the iranian economy and its government imposed by a subset of developed countries the effects of these sanctions on the iranian economy in general and upon upper and lower income rural and urban iranian households as well as the iranian government are modelled using a computable general equilibrium cge model we supplement the global trade analysis project 8 data set using income and expenditure shares from the urban and rural household income and expenditure survey from the statistical centre of iran sci the model is calibrated to simulate the effects of international sanctions as closely as possible we use endogenous trade taxes to simulate the effects of sanctions on iranian oil and petrochemical exports and iranian imports of petroleum products metal products and motor vehicles our study finds that international sanctions reduced aggregate iranian welfare by 14 15 rural households in iran suffered welfare losses which were almost double those experienced by urban households and the poorest urban and rural households experienced the largest welfare losses in the order of 5 10 but the government of iran sees a decrease in real revenue of 40 50 due to the large negative effect of sanctions on the iranian oil sector

economic and environmental impact analysis of carbon tariffs on chinese exports as an alternative measure for the proposal of border tax adjustments btas advocated by the countries that seek to abate co2 emissions hereafter referred to as abating countries export carbon tax ect voluntarily conducted by the developing countries has been widely discussed in recent years this paper uses the multi regional and multi commodity computable general equilibrium cge model and the gtap8 1 database to investigate the economic and environmental effects of carbon tariffs on chinese exports the following three policy scenarios are considered 1 the abating countries implement cap and trade emission programs without btas 2 the unilaterally abating countries levy import tariffs and export subsidies on non abating countries and 3 the abating countries implement unilateral climate policies combined with ect imposed by china the ect policy of china is evaluated with a carbon price set at 17 us t co2 results illustrate that the ect voluntarily implemented by china is ineffective in reducing its domestic co2 emissions moreover ect merely has a minor impact on global emissions finally the competitiveness of china s energy intensive and trade exposed eite industries suffers substantial losses if export tariffs are imposed however china s gains in terms of welfare and gross domestic product gdp would be slightly improved if an ect policy is implemented compared to the scenario where china is subjected to btas levied by the abating coalition in the light of the tradeoff between tariff revenue for welfare and competiveness losses of the eite industries it is therefore difficult to conclude that carbon tariff on chinese exports is an alternative policy to btas

emissions targets and the real business cycle intensity targets versus caps or taxes for reducing greenhouse gas emissions intensity targets are attracting interest as a flexible mechanism that would better allow for economic growth than emissions caps for the same expected emissions however the economic responses to unexpected productivity shocks differ using a real business cycle model we find that a cap dampens the effects of productivity shocks in the economy on all variables except for the shadow value of the emissions constraint an emissions tax leads to the same expected outcomes as a cap but with greater volatility certainty equivalent intensity targets maintain higher levels of labor capital and output than other policies with lower expected costs and no more volatility than with no policy

comparing policies to combat emissions leakage border carbon adjustments versus rebates we explore conditions determining which anti leakage policies might be more effective complements to domestic greenhouse gas emissions regulation we consider four policies that could be combined with unilateral emissions pricing to counter effects on international competitiveness a border charge on imports a border rebate for exports full border adjustment and domestic output based rebating each option faces different potential legal hurdles in international trade law each also has different economic impacts while all can support competitiveness none is necessarily effective at reducing global emissions nor is it possible to rank order the options effectiveness depends on the relative emissions rates elasticities of substitution and consumption volumes we illustrate these results with simulations for the energy intensive sectors of three different economies the united states canada and europe although most controversial full border adjustment is usually most effective but output based rebating for key manufacturing sectors can achieve many of the gains

the eu decarbonisation roadmap 2050 what way to walk we carry out a detailed cge computable general equilibrium analysis of the eu decarbonisation roadmap 2050 on a macroeconomic and on a sectoral level herein we study a reference scenario that implements existing eu policies as well as 3 unilateral and 3 global climate action scenarios we identify global climate action with international emissions trading and the full equalization of co2 prices across all eu sectors as a reasonable policy option to avoid additional costs of the decarbonisation roadmap to a large extent this policy option may include cdm clean development mechanism in the sense of where flexibility in an extended form if there are countries without emissions caps moreover we identify diverse sectoral effects in terms of output investment emissions and international competitiveness we conclude that the successful realization of the eu decarbonisation roadmap probably requires a wise and joint consideration of technology policy design and sectoral aspects

robust strategies for facility location under uncertainty abstract this paper considers a stochastic facility location problem in which multiple capacitated facilities serve customers with a single product and a stockout probabilistic requirement is stated as a chance constraint customer demand is assumed to be uncertain and to follow either a normal or an ambiguous distribution we study robust approximations to the problem in order to incorporate information about the random demand distribution in the best possible computationally tractable way we also discuss how a decision maker s risk preferences can be incorporated in the problem through robust optimization finally we present numerical experiments that illustrate the performance of the different robust formulations robust optimization strategies for facility location appear to have better worst case performance than nonrobust strategies they also outperform nonrobust strategies in terms of realized average total cost when the actual demand distributions have higher expected values than the expected values used as input to the optimization models

an integrated approach for planning a long term care network with uncertainty strategic policy and equity considerations abstract considering key uncertainties and health policy options in the reorganization of a long term care ltc network is crucial this study proposes a stochastic mixed integer linear programming model for planning the delivery of ltc services within a network of care where such aspects are modeled in an integrated manner the model assists health care planners on how to plan the delivery of the entire range of ltc services institutional home based and ambulatory services when the main policy objective is the minimization of expected costs and while respecting satisficing levels of equity these equity levels are modeled as constraints ensuring the attainment of equity of access equity of utilization socioeconomic equity and geographical equity the proposed model provides planners with key information on when and where to locate services and with which capacity how to distribute this capacity across services and patient groups and which changes to the network of care are needed over time model outputs take into account the uncertainty surrounding ltc demand and consider strategic health policy options adopted by governments the applicability of the model is demonstrated through the resolution of a case study in the great lisbon region in portugal with estimates on the equity cost trade off for several equity dimensions being provided

regional carbon policies in an interconnected power system how expanded coverage could exacerbate emission leakage abstract interconnected regional electricity markets are often subject to asymmetric carbon policies with partial coverage for co2 emissions while the resulting problem of carbon leakage has been well studied its mitigation has received relatively less attention we devise a proactive carbon policy via a bi level modelling approach by considering the impact of an emission cap that limits the cost of damage from a regional power market in particular a welfare maximising policymaker sets the cap when facing profit maximising producers and the damage costs from their emissions at two nodes a partial coverage policy could degrade maximised social welfare and increase total regional co2 emissions with potential for carbon leakage due to a higher nodal price difference a modified carbon policy that considers co2 emissions from both nodes tightens the cap which increases maximised social welfare and decreases total co2 emissions vis a vis the partial coverage policy albeit at the cost of greater scope for carbon leakage as it causes nodal prices to diverge as a compromise an import coverage policy implemented by california that counts only domestic and imported co2 emissions could alleviate carbon leakage at the cost of lower maximised social welfare with higher total emissions vis a vis the modified coverage policy

capacity expansion under stochastic demands we consider the problem of optimally meeting a stochastically growing demand for capacity over an infinite horizon under the assumption that demand for product follows either a nonlinear brownian motion or a non markovian birth and death process we show that this stochastic problem can be transformed into an equivalent deterministic problem consistent with earlier work by a manne the equivalent problem is formed by replacing the stochastic demand by its deterministic trend and discounting all costs by a new interest rate that is smaller than the original in approximate proportion to the uncertainty in the demand

downstream regulation of co2 emissions in california s electricity sector this paper examines the implications of alternative forms of cap and trade regulations on the california electricity market specific focus is given to the implementation of a downstream form of regulation known as the first deliverer policy under this policy importers i e first deliverers of electricity into california are responsible for the emissions associated with the power plants from which the power originated even if those plants are physically located outside of california we find that absent strict non economic barriers to changing import patterns such policies are extremely vulnerable to reshuffling of import resources the net impact implies that the first deliverer policies will be only marginally more effective than a conventional source based regulation

impacts of climate policy on the competitiveness of canadian industry how big and how to mitigate competitiveness concerns have been at the forefront of climate policy debates in canada particularly as a result of its high energy intensity and significant exposure to international markets this paper uses a dynamic computable general equilibrium model to assess the likely impacts on sectoral competitiveness that would accompany efforts to meet greenhouse gas mitigation targets that have been set by the canadian government additionally it evaluates several design mechanisms that could be used to reduce the negative competiveness impacts associated with adoption of domestic climate policies the analysis suggests that several sectors would likely face significant competiveness challenges under a reference scenario in which permits are given to emitters in lump sum however it finds that competiveness impacts can be minimized by using output based recycling of permits or by using border tax adjustments

flexible production resources and capacity utilization rates a robust optimization perspective abstract this paper presents a novel application of robust optimization ro in the context of optimal choices of product dedicated and flexible capacities in a spatial setting specifically we examine the impact of acquiring flexible production technologies on a firm s overall capacity utilization rates under demand uncertainty uncorrelated negatively and positively correlated demands are considered we implement an efficient ro algorithm which can solve large samples of robust min max problems in a realistic amount of time this paper examines the impact of three critical factors that lead to different capacity utilization and resource flexibility outcomes the degree of solution robustness selected by the decision maker to accommodate uncertain demand realizations the flexible capacity costs relative to dedicated capacity costs and the level of correlation between product demands one of our results show that according to robust solutions the total capacity may not be fully utilized because of the distinction between largest in unit terms and costliest demand realizations the second result shows that increasing the proportion of flexible capacity can increase capacity utilization however our results report less than full utilization even when using flexible capacity only we show that the optimal amount of flexible capacity and its impact on overall capacity utilization rate substantially depends on demand correlation

using output based allocations to manage volatility and leakage in pollution markets abstract output based allocations obas are typically used in emission trading systems ets with a fixed cap to mitigate leakage in sectors at risk recent work has shown they may also be welfare enhancing in markets subject to supply and demand shocks by introducing some flexibility in the total cap resulting in a carbon price closer to marginal damage we extend previous work to simultaneously include both leakage and volatility we study how oba permits can be implemented under an overall cap that may change with the level of production in contrast with a design that deducts oba permits from the overall permit allocation as is the current practice in the eu ets and california we show that introducing oba permits while keeping the overall cap fixed would only increase price fluctuations and induce severe welfare losses to non oba sectors

the allocation of seigniorage in the franc zone the beac and bceao regions compared abstract evidence from the franc zone suggests that a quarter in the bceao region to a half in the beac region of seigniorage accruing to the central bank finds its way to the fiscal authorities this share has increased throughout 1976 1991 as have the operating expenses of the central banks in the bceao region there has been a shift in seignoirage toward the larger and richer members of the mone tary union more so than in the beac region this is attributed to the dividend distribution regimes credit allocation process and events in the financial sector in each monetary union

adjustment with a fixed exchange rate cameroon cote d ivoire and senegal as members of the cfa franc zone cameroom cote d ivoire and senegal cannot use the nominal exchange rate as a tool of macroeconomic adjustment this article considers these countries responses to the commodity and oil price shocks of the 1970s in light of this and other institutional constraints using a two sector model it shows that there exist instruments that in principle permit the real exchange rate depreciation necessary for adjusting to macroeconomic imbalances the authors interpret the very different adjustment experiences of the three countries despite their common economic structure and institutional setting in terms of different uses of these instruments alternative assumptions about the labour market leave the qualitative nature of the results unaltered statistical analysis of data from the three countries confirms the model s linking of the current account and real exchange rate with the instruments of adjustment

effects of unilateral climate policy on terms of trade capital accumulation and welfare in a world economy we present a two good two country overlapping generations model where emissions arise from production and each country has a domestic emission permit system when one country unilaterally reduces her cap on emissions her output available for domestic and foreign consumption diminishes more than in the other country with unchanged consumption expenditure shares for both goods the domestic terms of trade improve while capital stocks decline in the reducing and less strongly in the non reducing country improving terms of trade in the reducing country and falling capital stocks lead in total to welfare losses in both countries however if the country which unilaterally reduces her emission permits is a net creditor to the world economy and the golden rule applies her own welfare loss remains below that of the non reducing country

carbon control policies competitiveness and border tax adjustments abstract several propositions have recently been made to use border tax adjustments btas to address the loss of competitiveness induced by unilateral stringent domestic pollution control policies this paper explores in a general equilibrium framework the sectoral and welfare implications of a unilateral domestic ghg control policy combined with a bta scheme using the canadian economy as an illustration we assess the extent to which btas achieve their objectives and analyze the impacts of different methods of recycling the bta proceeds to support domestic industries our simulation results suggest that imposing btas on the imports of non fossil and energy intensive products reduces or removes completely the negative competitiveness impacts that domestic industries suffer from the use of the proceeds of the btas to support domestic energy intensive industries improves their competitiveness and more importantly in some cases overprotects them as it allows them to even increase their output in comparison to the benchmark without emissions control our results also shed light on the existence of heterogeneity in the composition of energy intensive industries as far as the recycling method of the bta proceeds is concerned energy intensive industries that are more oriented toward the domestic market are better off with the recycling of the bta proceeds towards gross output than towards exports alone finally abstracting from the environmental benefits of reduced emissions we find that a bta entails a higher welfare cost to households

climate change policy s interactions with the tax system abstract this paper presents a range of insights from recent literature on how climate change policies and other environmental policies interact with the fiscal system it explores four issues associated with fiscal interactions first it examines how these interactions influence the prospects for a double dividend both an environmental improvement and a reduction in the costs of the tax system second it analyzes how the use of revenues from a carbon tax or from a cap and trade system involving auctioned emissions allowances influences these policies economic costs third it addresses the question whether carbon taxes or cap and trade programs represent more efficient sources of government revenue than other more traditional revenue sources such as income sales or payroll taxes finally it analyzes how fiscal interactions affect the choice between co 2 emissions pricing instruments carbon taxes and cap and trade and other climate policy instruments

combining revenue and equity in capacity allocation of imaging facilities abstract because of high procurement and operating costs imaging facilities e g magnetic resonance imaging mri are usually critical resources in hospitals hospital managers are under high pressure to pursue high utilization of the capacity which leads to long waiting time for patients however different types of patients have different access time targets determined by their priorities according to the urgent levels and payments the access time target is defined as the maximal amount of time between the appointment date and the examination date for public hospitals it is important to manage patient access to critical resources by considering the equity among different types of patients without sacrificing revenue this paper proposes a nonlinear mixed integer programming nmip model for allocating the capacity of imaging facilities with the objective of maximizing revenue under the constraints of maintaining equity among different types of patients the equity constraints are defined as the same access levels for different types of patients and the joint chance constraint for the same service levels in terms of waiting time to solve this model each time slot rather than the imaging facility is considered as a server which leads to an m d n queuing model based on an analysis of the m d n model an approximation approach is proposed for the nmip model and cplex is used to solve the approximated model extensive numerical experiments based on real data from a large public hospital in shanghai show the applicability and performance of the proposed model and investigate the impact of different parameters

structural change and cross country growth empirics one of the most striking features of economic growth is the process of structural change whereby the share of agriculture in gdp decreases as countries develop the cross country growth literature typically estimates an aggregate homogeneous production function or convergence regression model that abstracts from this process of structural change this paper investigates the extent to which assumptions about aggregation and homogeneity matter for inferences regarding the nature of technology differences across countries using a unique world bank dataset it estimates production functions for agriculture and manufacturing in a panel of 40 developing and developed countries for the period from 1963 to 1992 it empirically models dimensions of heterogeneity across countries allowing for different choices of technology within both sectors the paper argues that heterogeneity is important within sectors across countries implying that an analysis of aggregate data will not produce useful measures of the nature of the technology or productivity it shows that many of the puzzling elements in aggregate cross country empirics can be explained by inappropriate aggregation across heterogeneous sectors

international technology oriented agreements to address climate change much discussion has surrounded possible alternatives for international agreements on climate change particularly post 2012 among these alternatives technology oriented agreements toas are perhaps the least well defined we explore what toas may consist of why they might be sensible which toas already exist in international energy and environmental governance and whether they could make a valuable contribution to addressing climate change we find that toas aimed at knowledge sharing and coordination research development or demonstration could increase the overall efficiency and effectiveness of international climate cooperation but are likely to have limited environmental effectiveness on their own technology transfer agreements are likely to have similar properties unless the level of resources expended is large in which case they could be environmentally significant technology specific mandates or incentives could be environmentally effective within the applicable sector but are more likely to make a cost effective contribution when viewed as a complement to rather than a substitute for flexible emissions based policies these results indicate that toas could potentially provide a valuable contribution to the global response to climate change the success of specific toas will depend on their design implementation and the role they are expected to play relative to other components of the policy portfolio

emissions taxes versus intensity standards second best environmental policies with incomplete regulation the best emissions tax or emissions cap may be an inferior instrument under incomplete regulation leakage without leakage an intensity standard regulating emissions per unit of output is inferior due to an implicit output subsidy this inefficiency can be eliminated by an additional consumption tax with leakage an intensity standard can dominate the optimal emissions tax since the implicit output subsidy prevents leakage the addition of a consumption tax improves an intensity standard s efficiency may prevent leakage and may be efficient comparing intensity standards to output based updating shows that the latter dominates if updating is sufficiently flexible

the impacts of carbon pricing on coastal megacities a cge analysis of singapore abstract pricing carbon is a widely used policy instrument for climate change mitigation quantitative analysis of carbon pricing are mainly conducted at the regional and national level rarely at the city level due to data availability as a representative of coastal megacities that are vulnerable to both climate change and climate policies singapore has announced to impose carbon tax on large direct emitters as a complementary mitigation option to technical measures a city level computable general equilibrium cge model is developed to simulate potential impacts of carbon pricing on the city including paying border carbon adjustment bca on exports or introducing a domestic carbon tax different sector coverages and carbon tax revenue recycling schemes are investigated for domestic carbon tax the simulation results show that a domestic carbon tax is a more cost effective option than paying bca given an identical carbon price at s 10 t co 2 gdp total exports and household consumption would decline less and average abatement cost is much smaller in the carbon tax scenarios compared to the bca scenario in terms of absolute emissions reduction a carbon tax that covers energy manufacturing and land transport sectors would be preferred making emissions around 2 7 lower than 2010 baseline level