A Study on Energy Tax Reform for Carbon Pricing Using an Input-Output Table for the Analysis of a Next-Generation Energy System

Abstract

Carbon pricing, such as a carbon tax, is an invisible hand that leads to the construction of a sustainable low-carbon society, and precise analysis of the impact of carbon pricing on each sector of the economy is indispensable for its design. In this study, an equilibrium price model based on the 2015 input-output table was used for the analysis of next-generation energy systems (2015 IONGES) and the effect of the introduction of a carbon tax on the price of the industrial sector was assessed. Based on the existing energy-related tax system in Japan, the introduction of a carbon tax is regarded as an increase in the tax for global-warming countermeasures (TGWC) in the petroleum and coal tax (PCT). While existing energy-related taxes are designed to place a relatively heavy burden on the transportation sector, tax reform of the petroleum and coal tax has a relatively large effect on raising prices in energy-conversion and energy-intensive sectors. As a result, the reform of the energy-related tax may promote the introduction of energy-saving technology and decarbonization technology, both in the transportation sector and in a wider range of sectors, and may work to correct the unfairness of the tax burden between sectors.