Economic Impact of the Emission-Reduction Policy: GTAP-E Model

Josephine Wuri (), Yuliana Rini Hardanti (), Rubiyatno Rubiyatno (), Maria Theresia Ernawati () and Ni Kadek Ayu Kristianti ()
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Josephine Wuri: Department of Economics, Faculty of Economics, Sanata Dharma University, Yogyakarta, Indonesia
Yuliana Rini Hardanti: Department of Economics, Faculty of Economics, Sanata Dharma University, Yogyakarta, Indonesia
Rubiyatno Rubiyatno: Department of Management, Faculty of Economics, Sanata Dharma University, Yogyakarta, Indonesia
Maria Theresia Ernawati: Department of Management, Faculty of Economics, Sanata Dharma University, Yogyakarta, Indonesia
Ni Kadek Ayu Kristianti: Department of Economics, Faculty of Economics, Sanata Dharma University, Yogyakarta, Indonesia

International Journal of Energy Economics and Policy, 2025, vol. 15, issue 2, 44-50

Abstract: Increasing greenhouse gas (GHG) emissions is a severe global health and well-being problem. Countries around the world are striving to overcome climate change-related problems. This study analyzes the economic impact of Indonesia's emission-reduction policy of a carbon tax along with B40 renewable energy and trade regulation policies. This study uses a general equilibrium approach with several simulations of the Global Trade Analysis Project-Energy (GTAP-E) model. The GTAP-E approach analyzes the interaction between trade and energy policies. The GTAP-E model can simulate specific policies in government plans to assess their impact on macroeconomic conditions, bilateral trade, and the energy sector. The study results show that emission-reduction and trade regulation policies decrease inflation rates, economic growth, and welfare. According to bilateral trade research, Indonesia's crude palm oil (CPO) exports to India and China have increased, producing a trade surplus. This result demonstrates an increase in trade competitiveness despite trade regulations. These findings reveal that, while emission-reduction policies can impact economic growth in the short term, they can also boost international trade positions, support the transition to a low-carbon energy system, and achieve sustainable economic development.

Keywords: Carbon Tax; Greenhouse Gas Emission; GTAP-E; Growth; Sustainable Development; Trade Balance (search for similar items in EconPapers)
Date: 2025
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DOI: 10.32479/ijeep.18078

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