The removal of fossil fuel subsidies in Italy and interactions with the 2030 EU climate and energy framework

Carlo Orecchia and Gionata Castaldi

No 333151, Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project

Abstract: The removal of environmentally harmful subsidies (EHS, henceforth) is at the centre of the international debate especially after the signature and entrance into force of the Paris Agreement. To evaluate the macroeconomic benefits stemming from the removal EHS we employed the global dynamic general equilibrium model ERMES (Economic Recursive-dynamic Model for Environmental Sustainability) based on the static model Gtap-E (McDougall et al., 2007) and on the Gtap 9 database (Aguiar et al., 2016) and includes representative firms and households and production factors. This type of models has been used extensively for the evaluation of fossil fuels subsidies removal (Burniaux and Chateau , 2011 and 2014, Bosello and Standardi, 2013; Jewell et al. 2018). The original structure of the Gtap-E model has been extensively modified and updated: the capital stock is not fixed but varies over time based on the so-called recursive dynamics; the energy system of the model has been carefully extended and considers the substitution (with CRESH functions, Hanoch 1975) between 11 different technologies; considers all GHGs: CO2 emissions, CH4, N2O and FGASS; the climate policy module is flexible enough to select the types of gas (CO2, CH4, N2O, FGAS), the sector (distinguishing between ETS and non-ETS) and the country.

Keywords: Resource/Energy; Economics; and; Policy (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:ags:pugtwp:333151

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