Pricing carbon emissions for Japan based on energy production

C. L. Chang*, Shigeyuki Hamori, M. McAleer

*Corresponding author for this work

Research output: Chapter/Conference proceedingConference proceedingAcademicpeer-review

1 Citation (Scopus)

Abstract

Fossil fuels such as coal, oil and gas generate carbon emissions that contribute to global warming and climate change. Taxes on carbon emissions can mitigate their effects on the environment by changing demand and supply. For taxes to be effective, accurate carbon emissions prices are required. The paper uses an innovative KLEM production function approach to calculate carbon emissions prices for Japan, where carbon emissions are the output, and capital (K), labour (L), energy (E) (or electricity), and materials (M), are the inputs. The variables capital, labour and materials are essentially fixed on a daily, weekly or monthly basis, whereas energy can be changed more frequently, such as daily, weekly or monthly, so that changes in carbon emissions essentially depend on changes in energy. If prices are set according to average cost pricing, the prices of carbon emissions and energy may be approximated by an energy production model with a constant factor of proportionality, so that carbon emissions prices will depend on energy prices. Using this innovative approach, the paper estimates carbon emissions prices for Japan using seasonally adjusted and unadjusted monthly data on the volumes of carbon emissions and energy, and energy prices, from December 2008 to April 2018.

Original languageEnglish
Title of host publication23rd International Congress on Modelling and Simulation - Supporting Evidence-Based Decision Making
Subtitle of host publicationThe Role of Modelling and Simulation, MODSIM 2019
EditorsS. Elsawah
Pages540-546
Number of pages7
ISBN (Electronic)9780975840092
Publication statusPublished - 2019
Event23rd International Congress on Modelling and Simulation - Supporting Evidence-Based Decision Making: The Role of Modelling and Simulation, MODSIM 2019 - Canberra, Australia
Duration: 1 Dec 20196 Dec 2019

Publication series

Series23rd International Congress on Modelling and Simulation - Supporting Evidence-Based Decision Making: The Role of Modelling and Simulation, MODSIM 2019

Conference

Conference23rd International Congress on Modelling and Simulation - Supporting Evidence-Based Decision Making: The Role of Modelling and Simulation, MODSIM 2019
Country/TerritoryAustralia
CityCanberra
Period1/12/196/12/19

Bibliographical note

Publisher Copyright:
Copyright © 2019 The Modelling and Simulation Society of Australia and New Zealand Inc. All rights reserved.

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