Pt 2: 'Multisectoral effects of a carbon tax on the UK economy', Dr Matthew Winning, UCL





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Published on Feb 20, 2013

Filmed at the UCL-Energy and UCL ISR breakfast seminar on 19 February 2013

Speaker: Dr Matthew Winning, Research Associate, UCL Energy Institute and UCL Institute for Sustainable Resources

Title: Multisectoral effects of a carbon tax on the UK economy: An Input-Output and Computable General Equilibrium approach

Abstract: Matthew explores the effects of implementing a policy instrument to achieve the UK 2020 carbon budget by using multisectoral energy-economy-environment modelling techniques.

A number of modifications to the 2004 input-output database are undertaken in order to make the model more applicable to the current policy analysis.

Firstly, the sectors included in EU Emissions Trading Scheme are identified and mapped to the economic sectors in the input-output table. An environmental input-output multiplier analysis of the "traded" and "non-traded" sectors is then undertaken. One significant result is that the electricity sector is important for the UK both in terms of economic output and emissions levels.

Secondly, the electricity sector is disaggregated in order to allow for substitution between electricity generation technologies of varying carbon-intensities. Again the IO multiplier analysis is undertaken but now with heterogeneous results for the electricity sector.

Finally, the modified database is used to create a Computable General Equilibrium model which simulates the effects of a carbon tax on the UK economy to reach a 34% reduction in emissions by 2020. Given that the tax raises revenue for government it is appropriate to compare different methods of revenue recycling and in particular whether a 'double dividend' of improved environmental and economic conditions in the UK is possible.


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