Details

Autor(en) / Beteiligte

• Pereira, Alfredo M.
• Pereira, Rui M.

Titel

On the environmental, economic and budgetary impacts of fossil fuel prices: A dynamic general equilibrium analysis of the Portuguese case

Ist Teil von

• Energy economics, 2014-03, Vol.42, p.248-261

Ort / Verlag

Amsterdam: Elsevier B.V

Erscheinungsjahr

2014

Link zum Volltext

Quelle

PAIS Index

Beschreibungen/Notizen

• This paper examines the influence of fossil fuel prices on carbon dioxide emissions, economic activity, and the public sector account in Portugal. It uses a dynamic general equilibrium model which highlights the mechanisms of endogenous growth and includes a detailed modeling of the public sector. Fuel price scenarios are based on forecasts by the US Department of Energy (DOE-US), the International Energy Agency (IEA-OECD) and IHS Global Insight Inc. The differences in relative fuel prices among the three scenarios lead to substantially different environmental impacts. Higher fuel prices in the DOE-US scenario lead to a 10.2% reduction in the policy effort required to meet the EU 2020 emission targets, while relative price changes in the IEA-OECD scenario result in a 19.2% increase in the required policy effort and decreasing fuel prices increase the emissions deficit by 95.9% under the IHS scenario. In terms of the long term economic impacts, our results suggest a 2.2% reduction in GDP in the DOE-US scenario and 1.9% in the IEA-OECD scenario and an increase of 1.4% in the IHS scenario. As to the budgetary impact, higher fuel prices lead to lower tax revenues, which, coupled with a reduction in public spending translates to lower public deficits. From a methodological perspective, our results highlight the importance of the mechanisms of endogenous growth. A scenario of higher fuel prices would, under exogenous economic growth assumptions, result in larger baseline emissions growth, substantially smaller economic effects, and rather different budgetary effects. From a policy perspective, our results highlight the importance of fossil fuel prices in defining the level of policy intervention required for compliance with international and domestic climate change legislation. •We examine the environmental, economic and budgetary impacts of fuel prices using a dynamic model of the Portuguese economy.•The general equilibrium model highlights the mechanisms of endogenous growth and the role of the public sector.•Fuel price scenarios are based on forecasts by the DOE-US, the IEA-OECD and IHS Global Insight Inc.•Differences among the three scenarios lead to substantially different environmental economic and budgetary impacts.•From a methodological perspective, we show the importance of endogenous growth mechanisms.•From a policy perspective, we show the impact of fuel prices on the level of policy intervention required by climate targets.