1 / 20

T owards finding the tax incidence of carbon taxes in south africa

Jan H van Heerden Heinrich Bohlmann. T owards finding the tax incidence of carbon taxes in south africa. OUTLINE OF THE PAPER. The Problem Possible Solutions Previous Study The Data Adjusting the Model. Policy Simulations Results Conclusion Further work. THE PROBLEM.

foy
Download Presentation

T owards finding the tax incidence of carbon taxes in south africa

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Jan H van Heerden Heinrich Bohlmann Towards finding the tax incidence of carbon taxes in south africa

  2. OUTLINE OF THE PAPER • The Problem • Possible Solutions • Previous Study • The Data • Adjusting the Model • Policy Simulations • Results • Conclusion • Further work

  3. THE PROBLEM • South Africa ranks amongst the first world countries in the world in CO2 pollution, and its footprint looks bad

  4. Emissions intensity Source: International Environmental Agency (IEA). 2001. Key world energy statistics. Paris: IEA. (www.iea.org/statist/key2001/keyworld-2001.pdf)

  5. POSSIBLE SOLUTIONS 1. Carbon Emissions Tax Actual measured emissions; or 2. Proxy tax bases: A. Fossil Fuel Input (Upstream): where fuels enter the economy based on the carbon content of the fuel. B. Output Tax (Downstream): (i) At point where fuel is combusted. (ii) May be based on average emissions of production processes.

  6. Previously • In 2004/5 the Dutch government funded a project (PREM) to search for double dividends in the environment and economy of South Africa. • We used a static CGE model to simulate the effects of carbon, fuel and energy taxes in the country. • We found triple dividends with some tax and recycling combinations (environment, economy and poverty) • Van Heerden, et al., Searching for Triple Dividends in South Africa: Fighting CO2 pollution and poverty while promoting growth, The Energy Journal, 2006

  7. This paper • Gives preliminary results of a World Bank project to search for double dividends in the environment and economy of South Africa. • We use a dynamic CGE model to • expand the electricity industry from being a single producer and distributor of electricity to a few generators and one distributor, and • simulate the effects of a fuel input tax in the country.

  8. THE DATA (1) • Updated 2011 database of South Africa • Core data taken from the 2011 SU tables (StatsSA) • Database aggregated to 45 sectors, with the electricity sector then split between 8 generators and 1 transmitter/distributor based on available data.

  9. THE DATA (2)

  10. Source: MMRF document from http://www.copsmodels.com/archivep.htm#tppa0080

  11. Database split of the electricity sector • We used the procedure followed by the MMRF model of CoPS: • Database split.docx

  12. THE MODEL (1) • Change in revenue dR= T.dX + X.dT • T is rate and X is base • But % change in X is x = 100*dX/X • Therefore dR = TxX/100 + X.dT • = Rx/100 + X.dT • dR affects government revenue and dT all prices

  13. THE MODEL (2) • ! Leontief demand for inputs ! • EquationE_x1_sa# Demands for commodity composites # (all,c,COM)(all,i,IND52) x1_s(c,i) - [a1_s(c,i) + a1tot(i)] = z(i); • EquationE_x1_sb# Demands for commodity composites #(all,c,COM45) x1_s(c,"ElecSup") - [a1_s(c,"ElecSup") + a1tot("ElecSup")] = z("ElecSup");! CES demand for inputs ! • EquationE_x1_sc(all,c,GEN) x1_s(c,"ElecSup") - a1_s(c,"ElecSup") • = z("ElecSup") - SIGMAGEN(c)*[p1_s(c,"ElecSup") + a1_s(c,"ElecSup") - p1_gen];

  14. POLICY SIMULATIONS • The modelling exercises focus on two pieces of government policy in South Africa • Integrated Resource Plan (IRP) for Electricity (2010-2030) • http://www.doe-irp.co.za/content/IRP2010_updatea.pdf • Carbon tax of R120/ton CO2e from 2016 • http://www.thedti.gov.za/parliament/Reducing_greenhouse_gas.pdf

  15. Baseline forecast (1)

  16. Baseline forecast

  17. RESULTS: Carbon tax/no recycling

  18. CONCLUSIONS • Implementing a CES demand function for generated electricity by the supplying industry causes a switch to green electricity but not nearly enough. Currently the supplier merely uses coal generated power much more efficiently and not enough substitution takes place. • The carbon tax by itself – especially with all the exemptions for the first five years – is not enough. Regulation of coal generated power, as well as pro-active stimulation of green generation together with the tax will be necessary to reach the targets.

More Related