مالیات کربن و ساختار بازار: تجزیه و تحلیل CGE برای روسیه

Russia is one of the world's major sources of carbon based energy as well as one its most intensive users. Introducing carbon taxes can lead to a reduction in emissions and encourage investment in energy efficiency. We investigate the economic effects of carbon taxes on the Russian economy under perfect competition and a Cournot oligopoly in output markets. The main findings are: (i) substituting carbon taxes for labour taxes can yield a strong double dividend in Russia; however, welfare gains strongly depend on the labour supply elasticity and elasticities of substitution between capital, labour, and energy. (ii) Under the assumption of a Cournot oligopoly with homogenous products and symmetric firms in the markets for natural gas, petroleum and chemical products, metals, and minerals, welfare costs of the environmental tax reform can be higher than under perfect competition. This is because introducing carbon taxes leads to a reduction in already sub-optimal output, thereby exacerbating pre-existing distortions arising from imperfect competition. (iii) Furthermore, increases in energy costs can result in higher mark-ups in some markets because of less competition resulting from firms' exit.

Russia is not only one of the world's major sources of carbon based energy – coal, oil and gas – but is also one the most intensive users of energy. Furthermore, Russia accounts for a disproportionately large share of global carbon emissions—some from 5% to 6% of global carbon emissions (EIA, 2011); even after making allowance for climatic conditions. In large part, the high carbon emission rates are consequence of outdated and inefficient technologies, a legacy of the Soviet era, reinforced by the low cost of energy (Bashmakov, 2009). For example, to produce one dollar of GDP, Russia requires by 28% more energy than Canada, a country with similar climatic conditions, and twice more than European countries on average (EIA, 2011). It has been estimated (World Bank, 2008) that Russia could reduce its use of primary energy use by some 45%, with consequent economic and environmental benefits. Much attention has been given to the issue of energy efficiency in Russia. Improvement of energy efficiency is one of the most important aspects of the Russian energy policy (Ministry of Energy, 2010). However, energy using technologies are typically embedded in capital equipment, e.g., power stations, smelters, etc., and buildings which have long productive lives, and hence the pace of technological change is inevitably a costly and long process. It raises concern that there is underinvestment in energy efficiency in Russia, i.e., an energy efficiency gap exists between the current and the social optimal energy use (Kozuchowski, 2008). There are different reasons which can slow down technical modernization. The replacement of technologies in Russia is particularly slow due to a combination of non-market failures – underestimation of adoption costs, high discount rates, and heterogeneity of energy users – and market failures—lack of information, principle-agent problems, and low energy prices because of inefficient price regulation and non-internalized environmental externalities (World Bank, 2008). On grounds of economic efficiency, only the existence of market failure can provide justifications for government intervention (Jaffe and Stavins, 1994a and Jaffe and Stavins, 1994b). This analyses focuses on non-internalized negative externalities considered as one of the reasons for the high energy/carbon intensity in Russia. Environmental taxes are small in Russia: for example, environmental payments paid by thermal power generation companies account for less than 0.1% of their total production costs, being considerably lower compared to many developed countries (EFA, 2009). Carbon taxes are one such Pigouvian tax and in Russia they would, potentially, address concerns on several fronts simultaneously. In the short to medium term they would, inter alia, (i) reduce CO2 and other emissions stemming from the use of energy commodities, (ii) induce energy users to optimize the energy efficiency of existing plants, (iii) substitute lower emission energy sources for higher emission sources and (iv) induce the adoption of passive energy saving technologies, e.g., improved insulation. In the longer term, the increased cost of primary energy products should both accelerate the rate of technological replacement and induce technological progress ( Ruttan, 1997, Newell et al., 1999 and Popp, 2002). Carbon taxation is not high on the political agenda in Russia. Nevertheless, recently there has been a political discourse in Russia regarding increases of environmental payments (Kozuchowski, 2008 and MNRERF (Ministry of Natural Resources and Environment of the Russian Federation), 2011). Although Russia has signed the Kyoto protocol and is subject to limits on its total carbon emissions, Russia currently is substantially below its limit and there would be no urgent need for a reduction of actual CO2 emissions (UNFCCC, 2010). According to Article 17 of the Kyoto protocol, Russia may sell part of its rights to emit CO2 to other countries as part of the international carbon trade (UNFCCC, 2006). This may constitute an additional benefit from increasing carbon taxes in Russia which is politically discussed (RT, 2010). Furthermore, according to the environmental taxation literature, an introduction of environmental taxes is often related to the concept of a strong double dividend, where substituting environmental taxes for other distortionary taxes can improve not only the environment, but also this can reduce efficiency costs of the tax system (Goulder, 1995). The occurrence of a strong double dividend is ambiguous and this depends, inter alia, on the tax system, economic structure, households preferences, and revenue recycling strategies ( Goulder, 2002). In case of environmental taxes, the revenue recycling policy becomes an important aspect. Compared to other possible revenue-recycling strategies, a reduction in labour taxes via revenues from environmental taxes is often considered as desirable, especially for Western economies, since it also addresses unemployment concerns (Bovenberg and van der Ploeg, 1994). In addition, some European countries have already implemented such environmental tax reforms, where an introduction of various environmental taxes (carbon dioxide or sulphur dioxide) is compensated by a reduction in personal income taxes or social security contributions (Bosquet, 2000). The motivation for such a policy would be valid for Russia, too, since the level of unemployment in Russia accounted for 7.5% of the total labour force in 2010 (FSSS, 2012). Moreover, distortions from labour taxation may be substantial in Russia: both taxes on labour income and social security contributions accounted for 27% of total government revenues in 2010 (FSSS, 2011a). Furthermore, substituting carbon taxes for labour taxes explicitly addresses the issue of income inequality, which is of high relevance for Russia. For example, the Gini coefficient for Russia was 0.42 in 2009 (FSSS, 2011b). Apart from tax distortions on factor and commodity markets, another important aspect which is often neglected in empirical studies is non-tax distortions from imperfect competition. In any real economy, many markets can be characterized as being imperfectly competitive. For example, many resource-based sectors require high investments in plants and equipment and therefore exhibit decreasing average costs (Devarajan and Rodrik, 1991). According to analytical work on this issue, market structure can significantly affect the outcome of an environmental tax reform. We therefore consider imperfect competition in some output markets in our analysis. In this analysis, we introduce carbon taxes refunded through a reduction in taxes on labour income to address the following objectives: (i) to test the double dividend hypothesis under perfect and imperfect competition in output markets, to analyse (ii) the incidence of carbon taxes, (iii) impacts on sectoral competitiveness, and (iv) effects on income equity. The analysis is based on a computable comparative static general equilibrium model—an energy/environment adaptation of the STAGE model (McDonald, 2007). To our knowledge this is the first such study for Russia, addressing the issue of a double dividend under perfect and imperfect competition. Moreover, despite comprehensive analytical work on environmental taxation under imperfect competition, there are few studies which treat this issue in complex numerical CGE models, which are able to reflect real-world complexities (e.g. Böhringer et al., 2008). The paper is organised as follows. Section 2 gives a brief overview on the literature on environmental taxation under imperfect competition, accompanied by some analytical results. Section 3 provides a brief description of the model framework, database, and experiments—a formal and informal description of the model can be found in the appendix Supplementary material. The results of simulations are presented in Section 4. Section 5 summarises the main results together with suggestions on how the analysis can be further developed.

Based on simulation results, we draw the following conclusions: 1) Substituting carbon taxes for labour taxes under perfect competition can yield a strong double dividend in Russia; however, the magnitude of welfare gains significantly depends on the labour supply elasticity and elasticities of substitution between labour, capital and energy. This confirms conclusions drawn by Capros et al. (1996) and Sancho (2010). 2) Domestically produced energy commodities such as natural gas, coal, petroleum products, and crude oil become more competitive in domestic and export markets because of lower production costs as well as a deprecation of the currency. As a result, export supply of energy increases. 3) In contrast, energy-intensive commodities, such as electricity, metals, wood products, and chemical products are most adversely affected by carbon taxes due to their high energy cost shares. Therefore, domestically produced energy-intensive commodities lose market shares in domestic and export markets. 4) Because of lower production costs and a depreciation of the domestic currency, domestic producers of non-energy-intensive commodities become more competitive in export and domestic markets compared to foreign firms. Therefore, there are increases in export supply as well as domestic demand for most domestically produced labour-intensive and some capital-intensive commodities. 5) Carbon taxes have a regressive impact, but a reduction in labour taxes redistributes income in favour of poor households so that substituting carbon taxes for labour taxes can increase not only the overall welfare, but also reduce income inequality in Russia. Moreover, a lower labour tax rate may reduce income tax evasion, which is a prominent problem in Russia and has been shown to strongly correlate with the tax rate level (Gorodnichenko et al., 2009). In the presence of a Cournot oligopoly, the cost of carbon taxation in terms of welfare is higher since it exacerbates pre-existing distortions arising from imperfect competition. Other relevant aspects can be summarized as follows: 6) Introducing carbon taxes results in higher market power of Russian gas producers in the export gas market due to a higher Russian share in its export markets. 7) Losses in economies of scale in the gas sector lead to higher average fixed costs, thereby diminishing the reduction in the producer price of natural gas compared to a perfectly competitive market. 8) There are increases in the mark-ups on chemical products and metals because of less competition in these markets resulting from firms' exit. 9) In contrast, pre-existing distortions arising from imperfect competition in the minerals market are partially alleviated via a lower producer price as well as a reduction in the mark-up on domestically sold minerals because of new entry. Moreover, the mark-up on petroleum products slightly falls due to entry of new firms. An occurrence (failure) of a strong double dividend is not the primary a reason why an environmental tax reform should (not) be carried out. The purpose of environmental taxes is to internalize negative environmental externalities. Substituting carbon taxes for labour taxes in Russia can increase energy efficiency and reduce emissions of CO2 and other emissions which are stemming from the use of energy commodities. Energy efficiency may improve due to the optimization of existing plants, the substitution of lower emission energy sources for higher emission sources and the adoption of passive energy saving technologies, e.g., improved insulation. Furthermore, Russia could benefit from selling non-utilized emission permits in international carbon markets. Such carbon sales have been reported for several Central European countries at prices 6–12 US$/tCO2, but not yet for Russia (Aldrich and Koerner, 2012). The 10% emission reduction simulated for Russia in this paper would be equivalent to 158.61 million metric tons of CO2 equivalents. At a price of about 12 $/t, this would more than compensate for the welfare losses we simulate under imperfect competition. Most market observers expect that there will be a global carbon reference price by 2020 and expect this price to be around 35 $/t (Point Carbon, 2011). Under such a price scenario, the benefits from carbon sales would exceed our simulated welfare losses under imperfect competition by a factor 6–12, depending on the assumption made on entry and exit of firms. We find that domestic producers of energy-intensive commodities would lose market shares in domestic and export markets in case of carbon taxation. A tax exemption of such sectors is therefore often discussed and sometimes implemented (OECD, 1995). Exemptions due to competitiveness concerns; however are hard to justify on both economic and environmental grounds (Böhringer and Rutherford, 1997 and Ekins and Speck, 1999). When looking at the effects of carbon taxes in Russia, one should not neglect that domestically produced energy commodities as well as labour-intensive commodities become more competitive compared to foreign firms. For the economy as a whole, what matters is the overall welfare effect which we found to be positive for Russia under perfect competition in output markets. In addition, changes in competitiveness are moderate according to our simulation results. The magnitude of changes mainly depends on emission reduction targets as well as revenue refunding schemes. Welfare costs arising from imperfect competition should not be neglected since these can be substantial. This raises the issue of alternative revenue recycling policies. The analysis could be extended by a comparison of other revenue recycling strategies. For example, in the presence of imperfect competition, carbon leakages and losses of competitiveness, an output-based refunding could be considered. Under such an output-based refunding, revenues from carbon taxes are partially recycled through output subsidies to imperfectly competitive sectors (Sterner and Hoglund, 2000, Fischer, 2011 and Fischer and Fox, 2009). Output-based refunding instead of a reduction in labour taxes could, however, diminish the inequity reducing effect of the policy package. Therefore, some combination of these two revenue allocation schemes could be considered. There are other limitations to this analysis. For example, we assume an oligopoly with homogenous products and symmetric firms, while product heterogeneity and asymmetry of firms with respect to production costs and emission intensity may be more realistic for some sectors. Introducing carbon taxes can shift production from less efficient to more efficient firms (Simpson, 1995), which may enhance the positive welfare effects we found. Another important drawback of this analysis is that technological change, which would result from investment in energy efficiency, is not captured in our comparative static CGE model. Introducing carbon taxes is expected to accelerate the diffusion of new energy-efficient technologies and encourage innovation processes in the long-run. Therefore, positive dynamic welfare effects from environmental tax reform are not accounted for in this analysis. Finally, increasing Russian export supply of energy raises concerns about carbon leakage, whose magnitude is not assessed in this single country analysis.