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Energy Pricing Policy and Environmental Quality in Nigeria: A Dynamic Computable General Equilibrium Approach

Opeyemi Akinyemi, Philip. O. Alege, Oluseyi. O. Ajayi and Henry Okodua
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Opeyemi Akinyemi: Department of Economics and Development Studies, Covenant University, Nigeria
Philip. O. Alege: Department of Economics and Development Studies, Covenant University, Nigeria,
Oluseyi. O. Ajayi: Department of Mechanical Engineering, Covenant University, Nigeria,

International Journal of Energy Economics and Policy, 2017, vol. 7, issue 1, 268-276

Abstract: The fuel subsidy policy as a policy had been argued to hamper efforts at environmental sustainability. Thus, this study investigates the extent to which the removal of fuel subsidy influences the level of carbon emissions in Nigeria over a 5 year period. It adopts the recursive dynamic version of the partnership for economic policy computable general equilibrium model based on the 2006 Nigerian social accounting matrix. Simulating a partial, gradual and complete removal of import tariff on imported petrol indicates reduction of emissions only when subsidy removal was partial. Findings from the results showed carbon emissions marginally increased under the gradual and one shot removal. This suggests that removing petrol subsidy was not sufficient to reduce carbon emissions level, but should be accompanied with necessary supporting policies. Fuel blending can be a useful alternative to fossil fuel along with renewable energy and green growth practices to ensure a low-carbon growth strategy

Keywords: Energy Policy; Environmental Quality; Dynamic Computable General Equilibrium (search for similar items in EconPapers)
JEL-codes: C68 Q43 Q56 (search for similar items in EconPapers)
Date: 2017
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