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Impact of Energy Price Reform on Environmental Emissions; A Computable General Equilibrium Approach

Davood Manzoor and Iman Haqiqi

MPRA Paper from University Library of Munich, Germany

Abstract: An increase in energy prices will decrease fossil fuel consumption; on the other hand, the cost-push will encourage technology improvement for firms and households. These changes will affect the emission level. This paper studies the changes in yearly pollutant emissions after an energy price reform in Iran. We apply a computable general equilibrium model which consists of 7 energy goods (Electricity, natural gas, liquid gas, gasoline, kerosene, fuel, gas-oil) and also 7 pollutants (CO, CO2, SO2, SO3, CH, SPM, NOx). The model is calibrated based on a Micro Consistent Matrix of 2001 from the Ministry of Energy. We also assume different scenarios of energy layer elasticity which describe different technology changes in our sensitivity analysis. The findings suggest that by an increase in energy prices, the emission of most pollutants would decrease except for CO and CH. For these two, depending on the technology changes after the policy, their emission may decline or not. The decline in CO2 emission will be between 9 and 16 percent.

Keywords: Air Pollution; Computable General Equilibrium model; Emissions; Micro Consistent Matrix; Technological change (search for similar items in EconPapers)
JEL-codes: C68 D58 D61 Q52 Q53 Q58 (search for similar items in EconPapers)
Date: 2012
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Published in Journal of Environmental Studies 60.37(2012): pp. 1-12

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