Countries have submitted their Nationally Determined Contributions (NDCs) to reduce greenhouse gas emissions beyond 2020 following the Paris Agreement. We consider these targets by using the climate change policy version of the GTAP-E model of the world economy to analyse economic and environmental outcomes in the transition from domestic settings to broad international linkages for selected major emitting regions. We have obtained several insights. First, developing nations present relatively low emission abatement costs compared to developed countries. China and India are also major emitters with substantial possibilities to create carbon credits for selling to other regions. Second, any forms of international carbon markets are confirmed to have lower costs for a linked global system than domestic-solely schemes. Third, the participation of China and India in an international carbon market particularly drives down the carbon price (to US$1.62 per tonne of CO_2-e) and economic costs of the system. Real GDP of countries in such a linkage will only decline by 0.1%, while the electricity sector in most countries only experiences 1% loss in their output levels. The US, European Union and Australia particularly benefit from the participation of China and India in the carbon linkage by significantly lowering costs on their economies. Finally, it is also found that not all international emission linkages benefit low abatement cost countries if they do not have suitable strategies to recycle their net carbon trading revenues.

Energy security has been a major concern in developing countries because of rapid economic development and population growth, low power generation capacity, and unwell-developed transmission infrastructure. Vietnam in this context has been under energy security threats for more than a decade and is currently having a new power policy to strongly develop power generation and distribution networks. It is expected that the country's economy is able to develop substantially due to massively additional energy supply once completing the plants and distribution networks but the likely impacts are still undefined. This paper extends an economic electricity-detailed model to examine the potential impacts of such a new power policy in Vietnam. We find that the policy will decrease the prices of both fossil-based and renewable-based electricity significantly by 40%–78% under a 2030 target scenario, benefiting all sectors in the economy to substitute for fossil fuels. Households are particularly benefited as evidenced by 5.64%-19.19% increases in per-capita utility. Overall, the Vietnamese economy is significantly advantaged with real GDP increasing by 5.44%-24.83% over different scenarios, which are much higher than the findings in other countries. More importantly, the policy moves the country to a low-carbon energy structure in the near future.

This paper examines the environmental and economic effects of six (European Union, Switzerland, Norway, New Zealand, South Korea and Kazakhstan) domestic national Emissions Trading Schemes (ETSs). We have extended the analysis to an international ETS among these schemes since their governments have shown an ambition to obtain a linked market and have been carrying out negotiations for many years towards that goal. We incorporated non-CO2 emissions into the GTAP-E model database and extended the model to estimate the impact of domestic ETSs and an international ETS. Our analysis provides detailed projections regarding emissions permits allocation and emissions fluctuations. The results indicate that emissions trading volumes are very small in both domestic and international ETS scenarios since Norway, Switzerland, New Zealand and Kazakhstan economies are very small compared with the European Union and South Korea. In addition, the results in the international ETS scenario do not differ greatly from domestic trading scenario. However, results indicate that emissions abatement takes place with the lowest cost through an international ETS setting.

The bilateral trade between Australia and Japan has played very important roles in Australian and Japanese economies over a long period of time. In this study, we apply the bounds testing approach within an Autoregressive Distributed Lag framework (ARDL) to evaluate the major determinants of Japanese demand for Australian exports. The modelling results show that real Gross Domestic Product (GDP) is the most important factor positively affecting the Japanese real imports from Australia. The real exchange rate and foreign reserves assets affect negatively but are inelastic in both the long run and the short run. With a value of -0.74, the error correction coefficient is very significant. This indicates that only a short period of time (4 months) is needed to achieve long run equilibrium.

This paper examines the impacts of theEmissions Reduction Fund on the Australian economy. The GTAP-E model has been extended to allocate the subsidy directly to each eligible sector. The simulation of the subsidy policy has been supplemented by introducing an improvement of energy efficiency to non-agricultural sectors and of resource efficiency by using endowment factors in the agricultural sector. Results indicate that,with the current budget of A$2.55 billion, or US$1.86 billion (Scenario 1), Australia can only achieve theminimumcumulative emissions reduction target of 225 MtCO₂-e during 2015-20. Australia needs a budget of US$2.08 billion (Scenario 2) to achieve the maximumcumulative emissions reduction target of 279 MtCO₂-e. In both scenarios, the agricultural sector receives the highest payment from the Australian Federal Government under the subsidy programme, followed by the electricity generation sector. Under the scheme, Australia experiences only a mild contraction in the economy, with a reduction of real GDP by 0.37% and 0.55% in the two scenarios, respectively.

This paper assesses the potential effects on the U.S. economy if the U.S. retreats from its pledge to reduce greenhouse gas emissions agreed under the Paris Agreement. We assume prior to withdrawal that the U.S. and other nations or regions would introduce climate change policies, such as emissions trading schemes, to meet their emission targets which were agreed in Paris. When the U.S. withdraws from the Paris Agreement, it will not adopt such a policy. We use a modified version of the GTAP-E model to examine the effects on the U.S. economy of its anti-mitigation action in a counterfactual framework. The findings suggest that a retreat from the Paris Agreement would increase the real GDP and real private consumption by 1.13% and 0.78%, respectively, in the U.S. Given such improvements at the macro level, the effects on the U.S. energy sectors from the withdrawal are substantial. Prices of energy would reduce considerably, particularly for coal, natural gas, and consequently the price of electricity (-17.8%). These three energy sectors would also experience considerable expansions when the U.S. withdraws from the Paris Agreement compared to its position if it honored its previously pledged committed targets.

The theory of marginal abatement cost (MAC) indicates that if a country has a high MAC, it should link its domestic emissions trading scheme (ETS) with a foreign country, which has either low MAC or low emissions reduction target. This strategy will maximise its economic benefits from the linkage compared to its domestic ETS. On the other hand, if a country has a low MAC, it would seek a partner, which has either a high MAC or a high emissions reduction target. Using a computable general equilibrium model, namely the extended GTAP-E model, we found that Australia could yield the greatest economic benefits by linking its ETS with India. China is the second best alternative for Australia to link its ETS, while the European Union is the most expensive option for Australia. Overall, the results support the contention that any bilateral linkage is always better for Australia than operating its own domestic ETS alone.

Mitigating and adapting to the effects of climate change is an ongoing concern for developing countries like Vietnam. Hence, Vietnam ratified the Paris agreement without delay in October 2016. As a part of its climate policy strategy, the government is proposing to increase the taxes either on coal by 50% or petroleum products by 33.33%. This study employs the GTAP-E-Power model with additional improvements to include non-CO2 emissions to examine the impacts of such a policy on the Vietnamese economy. Results show that the trade-offs of the increased tax on petroleum products (Scenario 1) are much higher than the increased tax on coal (Scenario 2). For example, real GDP in Vietnam declines by 2.23% and 1.05% in Scenario 1 and Scenario 2, respectively. In addition, the country’s emissions level reduces by 10.23% in Scenario 2 compared to a reduction of 7.62% in Scenario 1. A higher tax on coal would foster the extension of renewable energy sectors faster than the impacts resulted from increasing tax on petroleum products. The increased demands by the private sector for electricity generated from renewable sources signals a potential for a sustainable development of the renewable electricity generation sectors in Vietnam.

We employ the GTAP-E model to analyse the short run effects of two emissions trading scheme (ETS) scenarios at global level subject to 2020 emissions targets. In Scenario 1, an ETS is formulated among Annex 1 countries only, while the ETS is expanded by adding China, India and South Korea in Scenario 2. The study shows that the cost of meeting emissions reduction commitments of Australia and other countries can be reduced by engaging in block-level emissions trading. In particular, a permit price of US$10.56 emerges with the ETS among Annex 1 countries. This price is reduced to US$6.32 when China, India and South Korea also joined the global ETS. Results show that the ETS has a modest overall economic impact on the Australian economy and globally. Results also confirm that selling permits to the world is not welfare enhancing; rather countries who buy permits improve their welfare.

The paper uses the GTAP-E model to examine whether the A$2.55 billion budget of the Emissions Reduction Fund (ERF) is adequate to buy the required abatement with respect to Australia's 2020 target. The ERF is examined according to the Marginal Abatement Cost (MAC) curve theory, with a carbon tax simulated in advance, and the equivalent subsidy outlay is calculated. We also examine whether the operations of some domestic Emissions Trading Schemes (ETSs) in other economies would affect Australia's emissions levels and MAC curves. The results indicate that the ERF budget can only help Australia to buy 85% of the required abatements, subject to its 2020 target, and that the implementations of ETSs in the other economies would not greatly affect either the emissions levels or the MAC curves in Australia.