Abstract:
Given the concern of New Zealand’s transition to the low-carbon economy, this dissertation will study New Zealand’s emission trading scheme (NZ ETS) with forestry sequestration and carbon tax and technology progress on largest agricultural emissions, energy efficiency improvement in energy sectors, and political background. Meanwhile, this research will clarify the gains and loss of New Zealand’s economy, energy and environment systems due to emission-reduction policies by an integrated analysis through the dynamic Computable General Equilibrium (CGE) Analysis.
First, in this study, the dynamic CGE model is used to capture the dynamic impact of the forestry carbon sequestration on endogenous carbon price, given emission caps, free allocation, and emissions coverage. Meanwhile, the essential factors are involved in the NZ ETS, such as carbon cap and free allocation, to simulate the impact of an external reduction target on carbon prices, land-use change, and macroeconomic variables. The results show that, to achieve New Zealand’s carbon emissions targets in 2050, the carbon price ranges from NZ$136.37 per ton to NZ$325.74 per ton.
Second, it is challenging to implement policies to reduce emissions without damaging the interests of the agricultural sector. In this study, I use the dynamic recursive land-based CGE model to analyse the impact of agricultural carbon tax and technology progress combined on agriculture emissions. This enables us to explore the differential impacts of technological progress, given an emissions tax, on the economy and agricultural GHG emissions reduction. A carbon tax, in the absence of technological progress, lowers GDP but does not cause substantial reduction in CO2-e emissions. Land-augmenting progress outperforms labour and capital augmenting technological progress.
Third, in this dissertation, a recursive dynamic CGE model is used to estimate the impact of New Zealand’s energy efficiency policy as an exogenous factor on energy use and carbon emissions because of rebound effect. The effectiveness of energy efficiency improvement is also evaluated in terms of its impact on CO2-e emissions and macro economy variables. Results show the economy-wide rebound effects brought by four energy types (coal, oil gas and electricity) are all much greater than 100%, which increase the final demand for energy consumption. However, 5% electricity efficiency improved has the most significant positive impact on reducing energy use and CO2-e emissions on the production side and contributes to 0.3% growth in GDP.