世界银行-碳税对南亚有利吗？（英）.pdf

Policy Research Working Paper 10462 Are Carbon Taxes Good for South Asia? Valerie Mercer-Blackman Lazar Milivojevic Victor Mylonas South Asia Region Office of the Chief Economist May 2023 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure AuthorizedProduced by the Research Support Team Abstract The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent. Policy Research Working Paper 10462 This paper estimates the effects of gradually introducing a US$25/ton CO 2 -equivalent carbon tax in South Asian economies using the Climate Policy Assessment Tool (CPAT). The results for South Asia suggest that mone- tized welfare co-benefits net of efficiency costs from such a tax—regardless of what other economies or regions do— are resoundingly positive, at 1.4 percent of GDP in 2030. Revenues from the carbon tax are estimated at 1.3 percent of GDP in 2030, which is substantial for a region with a low tax-to-GDP ratio. Once these revenues are recy- cled, the Keynesian multiplier effect through increased public investment and transfers to households is associ- ated with slightly positive net economic growth rate effects. Household incidence analysis shows that the carbon tax can be designed as an equity-enhancing policy, given net reductions in the Gini coefficient for consumption from revenue recycling. The carbon tax is also associated with a 2 percent weighted average input cost increase across eco- nomic sectors in 2030. Finally, the paper discusses selected results on and the political economy of a comprehensive energy price reform package (fossil fuel subsidy phaseout and carbon tax), with broad guidance on its implementa- tion. Overall, the paper provides supportive evidence for the green transition, showing that there need not be a trade-off between inclusive growth and going green in South Asia This paper is a product of the Office of the Chief Economist, South Asia Region. It is part of a larger effort by the World Bank to provide open access to its research and make a contribution to development policy discussions around the world. Policy Research Working Papers are also posted on the Web at http://www.worldbank.org/prwp. The authors may be contacted at vmercerblackman@worldbank.org. Are Carbon Taxes Good for South Asia? Valerie Mercer-Blackman 1 Lazar Milivojevic 2 Victor Mylonas 3 Keywords: carbon tax, climate change, decarbonization, energy transition, South Asia, fiscal incidence, revenue recycling, fossil fuel subsidy reform JEL Classification: E62, H22, H23, Q43, Q54 _________________________________________________________________________________ 1/ The World Bank, email: vmercerblackman@worldbank.org; 2/ The World Bank, email: lmilivojevic@worldbank.org; 3/ International Monetary Fund (IMF) and The World Bank, email: vmylonas@worldbank.org. The authors thank Yi (Claire) Li for excellent research assistance, and Paolo Agnolucci (The World Bank), Defne Gencer (The World Bank), Dirk Heine (The World Bank), Jules Hugot (Asian Development Bank), Tom Moerenhout (The World Bank), Ian Parry (International Monetary Fund), Margaret Triyana (The World Bank), and Hans Timmer (The World Bank) for helpful comments. The authors also thank participants at: i) the ADBI Conference on the Energy Market, Energy Pricing, and Low-Carbon Transition; ii) the Development Economics Prospects Group (The World Bank) internal seminar; and iii) the South Asia Chief Economist Office internal seminar (The World Bank) for helpful discussions. This paper builds on work initiated in the context of the Spring 2022 South Asia Economic Focus (World Bank, 2022a). All remaining errors are our own. 1 Table of Contents 1. Introduction . 2 2. Climate change mitigation policies in South Asia. 4 2.1 How much energy does South Asia consume? 4 2.2 South Asia’s climate mitigation commitments . 7 3. Data and methods . 8 3.1. Simulating carbon tax implementation 8 3.2 Modeling framework . 9 3.3 Simulated scenarios 12 4. Results . 13 4.1 Welfare co-benefits from averted damages . 13 4.2 Fiscal revenues 15 4.3 Economic growth . 16 4.4 Distributional impacts 17 4.5 Comprehensive energy price reform . 22 4.6 Sensitivity analysis . 24 5. Political economy and implementation considerations 27 6. Conclusion . 31 References 33 Appendix 1. Climate mitigation policies and NDCs in South Asia . 38 Appendix 2. Primary energy use, energy prices and emissions 40 Appendix 3. Roadmap for energy price reform . 42 2 1. Introduction Climate change poses a significant threat to development across South Asia. Appropriate adaptation and mitigation policies will be essential to embracing more green and inclusive growth in the future. However, investing in resilient infrastructure, which is key to climate change adaptation, as well as shifting to a low-carbon growth trajectory, will require considerable financing. Policy makers, thus, face difficult trade-offs amid limited resources: raising fiscal revenues is already a perennial challenge in South Asia as evidenced by its low average share of tax revenue in GDP (around 13 percent pre-COVID- 19). Moreover, the region’s per capita contribution to global greenhouse gas (GHG) emissions is very low: in 2021, a South Asian individual emitted 27 percent the amount of GHGs emitted by a non-South Asian, on average. This may explain why Paris Agreement pledges to reduce GHG emissions in South Asia tend to be unambitious and often dependent on external support. This paper focuses on climate mitigation policies, specifically carbon taxes, and shows that the impact of implementing such policies in South Asia can be overwhelmingly positive for its development. Carbon taxes are associated with additional (and predictable) fiscal revenues, which can be deployed to achieve development and adaptation targets while reducing the burden of decarbonization costs. Building on recent research and data (IMF, 2019a; Parry, Black, and Vernon, 2021), this paper provides evidence that carbon taxes, particularly if combined with a phaseout of fossil fuel subsidies, could benefit South Asia regardless of what other economies or regions do. The Climate Policy Assessment Tool (CPAT) is applied to estimate the effects of implementing a set of energy price reform measures centered around a carbon tax relative to a business-as-usual (BAU) scenario that assumes lack of new (or tightening of existing) climate mitigation policies. The results indicate that the gradual introduction of a carbon tax of US$25 per ton of carbon dioxide equivalent (/ton CO2e) provides monetized welfare co-benefits (reduced mortality/morbidity from local air pollution, as well as reduced accidents, congestion, road damage and output losses due to global warming), net of efficiency costs, equivalent to 1.4 percent of GDP in 2030. Moreover, government revenues-to-GDP would rise by almost 1.3 percentage points in 2030. We also consider three approaches (or ‘modes’) under which these additional revenues are redistributed ( recycled’) to help ensure a more equal income distribution and boost growth. The estimated distributional outcomes (post-‘revenue recycling’) in 2030 are progressive, with the Gini coefficient falling by between 1 and 5 percent depending on the economy and revenue recycling mode. Some economic sectors suffer more than others, but the overall effect on input costs is small (a GDP-weighted average input cost increase of around 2 percent), mostly because the sectors that see the highest cost increases represent a very small share of economy-wide output in the region. Real GDP growth effects are small but positive in 2030. In addition, we consider a ‘comprehensive energy price reform’ (CEPR) package that includes both the US$25/ton CO2e as well as the gradual phaseout of all existing fossil fuel subsidies, price controls and exemptions by 2030. Such a reform would lead to net monetized welfare co-benefits equivalent to 1.4 percent of GDP, government revenue gains of 2 percent of GDP, slightly higher, positive real GDP growth effects, and even more equalizing income distribution outcomes compared to just 3 implementing the carbon tax in 2030. To check sensitivity to international commodity price and carbon tax rate assumptions, we also apply CPAT assuming international energy prices are lower at the time of the introduction of the carbon tax in 2024 as well as a CEPR scenario with a carbon tax rate of US$12.5/ton CO2e. Finally, we touch upon why governments are oftentimes reluctant to introduce carbon pricing or phase out fossil fuel subsidies and provide some suggestions for the successful implementation of a reform like the CEPR. This also links to the international debate on who should share the burden of mitigating climate change. Some might suggest that it is unfair to impose carbon taxes on developing economies. After all, most of them emit but a small fraction of existing GHGs into the atmosphere in per capita terms, even as they face the most severe challenges from climate change. However, an increasing body of evidence (Hallegatte, 2022; Wollburg et al., 2023) shows that there are various direct benefits to adopting a well-designed green transition strategy to ward off climate damages. Our paper contributes to this literature. To our knowledge, this is also the first analysis that quantifies economic and distributional implications of climate mitigation policies for the South Asia region as a whole. We contribute to the literature by using updated household survey data from economies that have not been considered for this type of analysis in the past. Similar studies either focus disproportionately on large emitters (IMF, 2019b; Parry, Mylonas, and Vernon, 2019; 2021) or lack granular coverage of South Asia (Alonso and Kilpatrick, 2022). Ohlendorf et al. (2021) use an ordered Probit meta-analysis framework to examine 53 empirical studies in 39 (mostly advanced) economies and find that, in the less wealthy economies of their sample, the likelihood of progressive distributional outcomes following the introduction of mitigation policies is higher. For developing economies, the literature is sparse. A notable study on Latin American and Caribbean economies finds that up to 30 percent of revenues from carbon taxes are sufficient to compensate poor and vulnerable households on average, which makes these taxes quite effective from the point of view of redistribution (Vogt-Shilb et al., 2019). This paper is organized as follows. Section 2 defines the energy transition requirements in South Asia. 1 Section 3 describes the data and methods. Section 4 shows the main results. Section 5 discusses political economy considerations. Section 6 concludes. 1 South Asia includes Afghanistan, Bangladesh Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka. 4 2. Climate change mitigation policies in South Asia 2.1 How much energy does South Asia consume? Most of the region’s GHG emissions come from energy ‘use’ (either in production, or intermediate and final consumption). South Asia emits 67 percent of GHGs from energy, primarily from the use of (carbon-intensive) coal and oil, 24 percent from agriculture, and the rest from other sources (Figure 1a). The share of emissions from energy is lower than for the rest of the world, where this share is 75 percent. Commensurate with its relative size, India emits 80 percent of South Asia’s GHGs (Figure 1b). Figure 1. South Asia: composition of GHG emissions (excl. LULUCF), 2018 1a. By economy and sector 1b. Economy shares (%) in regional emissions Source: United Nations Framework Convention on Climate Change (UNFCCC). Note: GHG emissions include carbon dioxide (CO 2), methane (CH 4), nitrous oxide (N 2O), and F-gases (HFCs, PFCs, SF 6, and NF 3). LULUCF stands for ‘Land Use, Land-use Change and Forestry.’ The average South Asian is not a major energy consumer compared to consumers in most other regions, nor a major CO2 emitter, but is negatively impacted by climate change. As a developing region, South Asia’s per capita energy intensity is lower than that of many other regions. For example, Bangladesh, Sri Lanka, and Nepal use less energy per person than other economies with similar income levels (Figure 2a). Most GHG emissions from energy use come from coal (63 percent, reflecting India’s emissions), though this number varies across economies. Bangladesh is a large natural gas producer (and now importer), as more than two-thirds of its energy consumption come from natural gas (Figure 2b). 5 Figure 2. Energy intensity in South Asia is low, but a sizable portion of energy use comes from coal 2a. World: per-capita energy intensity, 2018 2b. South Asia: composition of CO2 emissions by economy and fuel, 2018 Source: Climate Policy Assessment Tool (CPAT) and World Bank World Development Indicators (WDI). Note: In Figures 2a and 2b, ‘South Asia’ includes Bangladesh, India, Nepal, Pakistan, and Sri Lanka. Reliance on carbon-intensive fossil fuels such as coal is related to environmental damages, with local air pollution being one of the key negative side effects of fossil fuel combustion in South Asia (World Bank, 2022b). Subsidized road fuels can worsen congestion, road damage, and accidents, due to higher driving rates. Moreover, the burning of fossil fuels contributes to climate change. From an economic point of view, it is optimal to account for all these ‘negative externalities’ in the user prices of fossil fuels, equating marginal private and social costs. Following Parry, Black, and Vernon (2021), Figure 3 shows what the 2020 socially optimal (or ‘efficient’) price of different fossil fuels would be in selected South Asian economies. The socially optimal price of each unit of fuel is composed of i) supply costs; 2 ii) global climate and local (outdoor) air pollution damages as well as transport-related externalities; 3 and iii) a standard value-added/general consumption tax. 4 2 For non-tradeable fossil fuels, these consist of total production costs. For tradeable fossil fuels, these equal the opportunity cost of home consumption (as opposed to sale abroad), which is quantified via the import-export parity price (based on whether an economy is a net importer or exporter of the fuel) and adjusted for home margins. 3 The calculations assume a social cost of carbon (SCC) of US$75/to