Macroeconomic Effects of Energy Efficiency Measures and Carbon Tax in Thailand: A Computable General Equilibrium Analysis

Abstract

Abstract Energy efficiency improvement is one of the measures undertaken by government of Thailand to achieve its Nationally Determined Contribution (NDC) by 2030 and contribute towards carbon neutrality 2050. The objective of this study is to compare the economy of Thailand before and after the implementation of energy efficiency improvement. This study also assessed the rebound effects of energy efficiency improvement and further analyzed the role of carbon tax in minimizing the rebound effects. In addition, the effects of GHG emissions with energy efficiency improvement and carbon tax were also assessed. The study was analyzed by developing a static computable general equilibrium (CGE) model of Thailand. The CGE model consists of 27 non-energy sectors and 5 energy sectors. This study finds that the energy efficiency improvement in the production sectors would lower the energy consumption in the overall production sectors but increase the consumption in the household sector and its associated GHG emissions from the energy use. However, energy efficiency improvement in both households and production sectors would cause a decline in the overall energy consumption and GHG emissions. Results show the rebound effects in the aforementioned energy efficiency improvement cases. It is found that the implementation of carbon tax of $5/tCO2e would not be enough to neutralize the rebound effects, however, carbon tax of $10/tCO2e would be sufficient to neutralize the rebound effects with GDP gain.