PL EN
RESEARCH PAPER
Different Responses of European Economies to Carbon Tax: Insights from National CGE Models for Poland, Germany, France, and the UK
 
 
 
More details
Hide details
1
College of Environmental Science and Engineering, Tongji University, China
 
 
Submission date: 2024-04-22
 
 
Final revision date: 2024-07-31
 
 
Acceptance date: 2024-10-03
 
 
Publication date: 2025-03-31
 
 
Corresponding author
Jin WANG   

College of Environmental Science and Engineering, Tongji University, China
 
 
GNPJE 2025;321(1):5-19
 
KEYWORDS
JEL CLASSIFICATION CODES
ABSTRACT
This paper compares the different responses of four European countries – Poland, Germany, France, and the UK – to carbon taxation through the lens of open-source national Computable General Equilibrium (CGE) ThreeME models. It investigates the medium-term impacts of a linearly increasing carbon tax from 2020 to 2035 on emissions reduction, energy consumption, and economic growth within these countries. The study reveals significant emissions reductions across all nations by 2035, with Poland experiencing the most substantial decrease, highlighting the influence of energy and carbon intensity on the effectiveness of carbon taxes. Investment growth spurred by carbon taxation emerges as a pivotal driver for economic resilience, notwithstanding the despite nuanced adverse effects on final consumption and trade balances. The paper underscores the dual nature of carbon taxes: as a potent mechanism for decarbonization decarbonisation and as a complex economic influencer necessitating nuanced fiscal strategies to mitigate potential adverse effects on economic performance. Through a rigorous comparison of carbon tax impacts across different economic structures, this study contributes valuable insights into the trade-offs and synergies between environmental and economic objectives, underlining the necessity for integrated policy approaches to achieve sustainable growth and climate targets in the European context.
REFERENCES (25)
1.
An K., Zhang S., Zhou J., Wang C. [2023], How can computable general equilibrium models serve low-carbon policy? A systematic review, Environmental Research Letters, 18 (3), 033002, https://doi.org/10.1088/1748-9....
 
2.
Antimiani A., Costantini V., Paglialunga E. [2015], The sensitivity of climate-economy CGE models to energy-related elasticity parameters: Implications for climate policy design, Economic Modelling, 51: 38–52, https://doi.org/10.1016/j.econ....
 
3.
Böhringer C., Rutherford T. F. [2013], Transition towards a low carbon economy: A computable general equilibrium analysis for Poland, Energy Policy, 55: 16–26, https://doi.org/10.1016/j.enpo....
 
4.
Böhringer C., Rutherford T. F., Schneider J. [2021], The incidence of CO2 emissions pricing under alternative international market responses, Energy Economics, 101, 105404, https://doi.org/10.1016/j.enec....
 
5.
Bulavskaya T., Reynès F. [2018], Job creation and economic impact of renewable energy in the Netherlands, Renewable Energy, 119: 528–538, https://doi.org/10.1016/j.rene....
 
6.
Callonnec G., Gouëdard H., Hamdi-Cherif M., Landa G., Malliet P., Reynès F., Saussay A. [2023], Macroeconomic Effects of Achieving Carbon Neutrality in France [SSRN Scholarly Paper], https://doi.org/10.2139/ssrn.4....
 
7.
European Commission [2023], The update of the nationally determined contribution of the European Union and its Member States, https://unfccc.int/sites/defau... (accessed on 5.03.2024).
 
8.
Fragkos P., Fragkiadakis K. [2022], Analyzing the Macro-Economic and Employment Implications of Ambitious Mitigation Pathways and Carbon Pricing, Frontiers in Climate, 4, https://www.frontiersin.org/ar... (accessed on 5.03.2024).
 
9.
Fragkos P., Fragkiadakis K., Paroussos L. [2021], Reducing the Decarbonisation Cost Burden for EU Energy-Intensive Industries, Energies, 14 (1): 236, https://doi.org/10.3390/en1401....
 
10.
Fragkos P., Fragkiadakis K., Sovacool B., Paroussos L., Vrontisi Z., Charalampidis I. [2021], Equity implications of climate policy: Assessing the social and distributional impacts of emission reduction targets in the European Union, Energy, 237, 121591, https://doi.org/10.1016/j.ener....
 
11.
Frondel M., Schubert S. A. [2021], Carbon pricing in Germany’s road transport and housing sector: Options for reimbursing carbon revenues, Energy Policy, 157, 112471, https://doi.org/10.1016/j.enpo....
 
12.
He L., Li X., Cui Q., Guan B., Li M., Chen H. [2024], Decarbonization pathways to subregional carbon neutrality in China based on the top-down multi-regional CGE model: A study of Guangxi, Energy, 294, 130846, https://doi.org/10.1016/j.ener....
 
13.
International Energy Agency [2022], World Energy Outlook 2022, https://www.iea.org/data-and-s... (accessed on 5.03.2024).
 
14.
IPCC [2023], AR6 Synthesis Report: Climate Change 2023, https://www.ipcc.ch/report/six... (accessed on 5.03.2024).
 
15.
Kaya Y., Yokobori K. [1997], Environment, energy, and economy: Strategies for sustainability, https://archive.unu.edu/unupre... (accessed on 5.03.2024).
 
16.
Landa Rivera G., Reynès F., Islas Cortes I., Bellocq F.‑X., Grazi F. [2016], Towards a low carbon growth in Mexico: Is a double dividend possible? A dynamic general equilibrium assessment, Energy Policy, 96: 314–327, https://doi.org/10.1016/j.enpo....
 
17.
Landis F., Fredriksson G., Rausch S. [2021], Between- and within-country distributional impacts from harmonizing carbon prices in the EU, Energy Economics, 103, 105585, https://doi.org/10.1016/j.enec....
 
18.
Mashhadi Rajabi M. [2023], Carbon tax accompanied by a revenue recycling increases Australia’s GDP: A dynamic recursive CGE approach, Journal of Cleaner Production, 418, 138187, https://doi.org/10.1016/j.jcle....
 
19.
Reynes F., Callonnec G., Saussay A., Landa G., Malliet P., Gueret A., Hu J., Hamdi-cherif M., Gouedard H. [2021], ThreeME Version 3: Multi-sector Macroeconomic Model for the Evaluation of Environmental and Energy policy – A full description, OFCE, ADEME, NEO, TNO, LSE.
 
20.
Rokicki B., de Souza K. B., de Santana Ribeiro L. C. [2023], Modelling the Effects of the EU Emissions Trading System in Poland: A Comparison Between IO And CGE Results, Journal of Regional Analysis and Policy, 53 (2): 54–69, https://doi.org/10.22004/ag.ec....
 
21.
Saveyn B., Van Regemorter D., Ciscar J. C. [2011], Economic analysis of the climate pledges of the Copenhagen Accord for the EU and other major countries, Energy Economics, 33: S34–S40, https://doi.org/10.1016/j.enec....
 
22.
Sen S., Vollebergh H. [2018], The effectiveness of taxing the carbon content of energy consumption, Journal of Environmental Economics and Management, 92: 74–99, https://doi.org/10.1016/j.jeem....
 
23.
Stadler K., Wood R., Bulavskaya T., Södersten C.‑J., Simas M., Schmidt S., … Tukker A. [2018], EXIOBASE 3: Developing a Time Series of Detailed Environmentally Extended Multi-Regional Input-Output Tables: EXIOBASE 3, Journal of Industrial Ecology, 22 (3): 502–515, https://doi.org/10.1111/jiec.1....
 
24.
Turner K., Alabi O., Katris A., Swales K. [2022], The importance of labour market responses, competitiveness impacts, and revenue recycling in determining the political economy costs of broad carbon taxation in the UK, Energy Economics, 116, 106393, https://doi.org/10.1016/j.enec....
 
25.
Zhang X., Liu X., Zhang Y., Xu H., Gong Y., Zhao T., Wen F. [2022], Combined Use of Logarithmic Mean Divisia Index and Kaya Identity for Identifying the Relationship between Carbon Emission and Impacting Factors, 2022 IEEE Global Conference on Computing, Power and Communication Technologies (GlobConPT), 1–8, https://doi.org/10.1109/GlobCo....
 
eISSN:2300-5238
Journals System - logo
Scroll to top