The impact of mitigating CO2 emissions on Taiwan's economy

doi:10.1016/S0140-9883(00)00060-8

Energy Economics

Volume 23, Issue 2, March 2001, Pages 141-151

https://doi.org/10.1016/S0140-9883(00)00060-8 Get rights and content

Abstract

In this paper, a computationally multi-objective programming approach and a Leontief inter-industry model are used to investigate the impact of mitigating CO₂ emissions on Taiwan's economy. The estimated result shows that Taiwan's GDP will drop 34% off the targeted GDP growth rate for the year 2000 and Taiwan's economy will be seriously weakened if annual CO₂ emissions are stabilized at the 1990 level. When Taiwan maintains CO₂ emissions at 128% of the 1990 level, then Taiwan's economy will be able to show a 5.37% average annual growth rate up to year 2000; a 157% CO₂ emission level would mean a 5.92% annual GDP growth rate; and a 213% CO₂ emission level for a 6.85% annual GDP growth rate. In addition, policy implications are presented in order to provide policy makers in economic planning.

Introduction

There is growing concern that in increasing accumulation of carbon dioxide in the atmosphere is leading to undesirable changes in global climate, such as the greenhouse effect. This has resulted in proposals to set physical targets for reducing emissions of CO₂. The Framework Convention on Climate Change (FCCC) was signed in Rio de Janeiro by more than 150 countries to promote international cooperation for achieving such reductions in June 1992. These countries officially addressed an international target to stabilize CO₂ emissions at the 1990 level by the year 2000 among the 36 Annex I countries.¹ The second Assessment Report of the Intergovernmental Panel on Climate Change (IPCC), approved in December 1995. It acknowledge that global CO₂ emissions should be less than 50% of current levels in order to stabilize CO₂ atmospheric concentrations, and that the Annex I countries should make an effort to limit and reduce their emissions within a given time frame. Furthermore, a legal grounding was agreed upon at the convention of parties (COP III) meeting in Kyoto, Japan, in December 1997, to acknowledge that global CO₂ gas emissions should be reduced by 5.2% of 1990 levels among 38 industrialized countries. COP III also demanded that all developing countries should be included in CO₂ emission reduction efforts; this will be discussed in the next COP IV.

Basically, Taiwan must pay close attention to the issue of global environmental change because the international trade plays a critical role on Taiwan's economy. By the end of 1996, total CO₂ emissions in Taiwan were 171×10⁶ tons. Projected CO₂ emissions in 2000 will reach 236×10⁶ tons, which is 203% of the 1990 level (116×10⁶ tons). From 1990 to 2000, the average growth rate of CO₂ emissions will be 7.1%. This Taiwan government may initiate relevant policy actions in the foreseeable future to fulfill its global responsibility in reducing production of CO₂, which contributes to the greenhouse effect. With this in mind, it is important to understand the current progress of advanced countries in implementing such policy actions and to simulate the impact of domestic measures to reduce greenhouse CO2 emissions on Taiwan's economy.

In this paper, we use a multi-objective programming to estimate the trade-off between GDP and CO₂ emissions in Taiwan. In order to achieve this objective, relevant literature is first reviewed. A multi-objective programming coupled with an input–output model is constructed to evaluate the economic impact of reducing CO₂ emissions on the Taiwan economy as a whole. Empirical data are collected and various options for mitigating industrial CO₂ emissions are simulated. Based on the simulation, policy implications are discussed and some suggested for the future research are recommended.

Section snippets

Literature review

As to the previous studies, Loucks (1975) addressed multi-objective programming within resource utilization and economic development decisions, with each objective being a trade-off itself. Hafkamp and Nijkamp (1982) presented a multi-objective programming approach and applied it to the issue of integrated resource planning. They argued that a single-objective model cannot assess social welfare changes accurately. Nijkamp (1986) employed multi-objective approach to evaluate the policy impact of

The multi-objective programming model

In this section, a multi-objective programming combined with an input-output model is employed to determine the trade-off between GDP growth and CO₂ emissions on Taiwan's economy. There are three reasons. First, the multi-objective approach is superior to the single-objective method, in that it focuses on the range of choices associated with a decision. The decision-maker can judge the relative values of objectives and find the ‘best’ possible values under the given conditions (Zeleny, 1982).

Empirical results

The data in the model include the 1994 input/output table, the 1996 energy balance table and other related data such as population, GDP, CO₂ emissions and import/export figures, etc. These data are run using the above model and with 2000 as the planning year. There are three reasons. Firstly, at the time of writing, COP III had not yet been organized. According to COP I and COP II, Annex I countries have to reduce their CO₂ emission levels by the year 2000 to 1990 emission levels. Therefore,

Concluding remarks

This paper employs a multi-objective programming model to evaluate the economic impact of mitigating CO₂ emissions in Taiwan. We show that the costs incurred by CO₂ emission controls are huge. Our empirical results show that, under CO₂ emissions controls, Taiwan's GDP will drop 34% off its maximized GDP objective for the year 2000 and that Taiwan's economy will significantly weaken if Taiwan's government stabilizes annual CO₂ emissions at 1990 levels. Restrictions on CO₂ emissions will reduce

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View full text

The impact of mitigating CO2 emissions on Taiwan's economy

Abstract

Introduction

Section snippets

Literature review

The multi-objective programming model

Empirical results

Concluding remarks

Energy Policy

Resource Energy Econ.

A response to the UK National Program for CO2 emissions

Energy Policy

An integrated interregional model for pollution control

A new algorithm of multi-objective programming: the center-point method

J. Manage. Sci.

The impact of mitigating CO₂ emissions on Taiwan's economy

A response to the UK National Program for CO₂ emissions