Economic and environmental effects of the CO2 taxation: an input-output analysis for Spain

CO2 emissions induced by human activities are the major cause of climate change; hence, strong environmental policy that limits the growing dependence on fossil fuel is indispensable. Tradable permits and environmental taxes are the usual tools used in CO2 reduction strategies. Such economic tools provide incentives to polluting industries to reduce their emissions through market signals. The aim of this work is to investigate the direct and indirect effects of an environmental tax on Spanish products and services. We apply an environmentally extended input-output (EIO) model to identify CO2 emission intensities of products and services and, accordingly, we estimate the tax proportional to these intensities. The short-term price effects are analyzed using an input-output price model. The effect of tax introduction on consumption prices and its influence on consumers’ welfare are determined. We also quantify the environmental impacts of such taxation in terms of the reduction in CO2 emissions. The results, based on the Spanish economy for the year 2007, show that sectors with relatively poor environmental profile are subjected to high environmental tax rates. And consequently, applying a CO2 tax on these sectors, increases production prices and induces a slight increase in consumer price index and a decrease in private welfare. The revenue from the tax could be used to counter balance the negative effects on social welfare and also to stimulate the increase of renewable energy shares in the most impacting sectors. Finally, our analysis highlights that the environmental and economic goals cannot be met at the same time with the environmental taxation and this shows the necessity of finding other (complementary or alternative) measures to ensure both the economic and ecological efficiencies. Keywords: CO2 emissions; environmental tax; input-output model, effects of environmental taxation

Environmental Tax on Products and Services Based on Their Carbon Footprint: A Case Study of the Pulp and Paper Sector

The main aim of this work is to define an environmental tax on products based on their carbon footprint. We examine the relevance of life cycle analysis (LCA) and environmentally extended input-output analysis (EIO) as methodological tools for identifying the emission intensities on which the tax is based. The price effects of the tax and the policy implications of considering non-CO 2 greenhouse gases (GHG) are also analyzed. The results from the case study on pulp production show that the environmental tax rate based on LCA (1.8%) is higher than both EIO approaches (0.8 and 1.4% for product and industry, respectively), but they are of the same order of magnitude. Although LCA is more product specific and provides a more detailed analysis, we recommend EIO as a more relevant approach to applying an economy-wide environmental tax. If an environmental tax were applied to non-CO 2 GHG instead to CO 2 alone, the tax would greatly affects sectors such as agriculture, mining of coal, extraction of peat, and food. Therefore, it is worthwhile for policy-makers to pay attention to the implications of considering either a CO 2 tax or a global GHG emissions tax in order to make their policy measures effective and meaningful. © 2012 Elsevier Ltd

Steam Engine Cornishman at Penzance Fair

W. Hancock's Burrell steam traction engine No.1740 'Cornishman' photographed at Penzance Fair, 1906. This photograph also appears in the Dawson collection, 178C30.(x)17 where it is dated 1910 and referenced HB61. Photograph numbered 344