Data on Fiscal Systems of Countries Represented in the ICES Model, with Focus on Fossil Fuel Subsidies and First Test Run

27 Pages Posted: 5 Sep 2014

See all articles by Francesco Bosello

Francesco Bosello

University of Milan - Department of Economics, Business and Statistics; CMCC - Centro Euro-Mediterraneo sui Cambiamenti Climatici

Gabriele Standardi

Fondazione Eni Enrico Mattei

Date Written: December 2013

Abstract

This study details the first experiment conducted to couple the information relative to fossil fuel subsidies with the database and structure of the ICES CGE model developed at the CMCC, and to test the general performance of the model simulating their potential removal. Data for multi country and multi-fuel analysis derive from a “reconstruction process” based upon the price gap method, created by the IEA. The policy exercise consists in an instantaneous phasing out of existing subsidies in 2050. Removals are implemented imposing an ad valorem tax exactly equal to subsidies estimated by IEA (2009). We also compare our results with Burniaux and Chateau (2011) which conducted a similar analysis with the OECD ENV-Linkages model. Both models predict the expected decrease in CO2 emissions which is more pronounced in countries where the subsidy size is larger (Russian Federation, Former Soviet Union Countries and Oil exporting Countries). On the contrary the EU, where subsidies are small, increases its emissions due to a leakage effect. In the next phase of the research fossil fuel subsidies will be introduced explicitly in the price structure of ICES model.

Keywords: fossil fuel subsidies, climate change mitigation, general equilibrium

JEL Classification: Q41, Q48, C68

Suggested Citation

Bosello, Francesco and Standardi, Gabriele, Data on Fiscal Systems of Countries Represented in the ICES Model, with Focus on Fossil Fuel Subsidies and First Test Run (December 2013). CMCC Research Paper No. 198, Available at SSRN: https://ssrn.com/abstract=2491650 or http://dx.doi.org/10.2139/ssrn.2491650

Francesco Bosello (Contact Author)

University of Milan - Department of Economics, Business and Statistics

Via Festa del Perdono, 7
Milan, 20122
Italy

CMCC - Centro Euro-Mediterraneo sui Cambiamenti Climatici

via Augusto Imperatore, 16
Lecce, I-73100
Italy

Gabriele Standardi

Fondazione Eni Enrico Mattei ( email )

Corso Magenta 63
20123 Milan
Italy

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