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10 EXIOBASE is a global multi-regional input-output (MRIO) database covering 44 countries and five rest of the world regions at a resolution of 200 products and 163 industries per country/region for the years (with estimates until 2016, Stadler et al under review). The database contains symmetric industry-byindustry and product-by-product input-output tables as well as product-by-industry supply-and-use tables. Final demand is broken down into final consumption of households, government and non-profit organizations serving households, gross fixed capital formation and changes in inventories and valuables. The system furthermore contains data on taxes and subsidies on products purchased, other net-taxes on production, compensation of employees; wages, salaries, and employers' social contributions (according to three skill levels), and operating surplus (consumption of fixed capital, rents on land, royalties on resources, remaining net operating surplus). For each country/region and industry/product, EXIOBASE has detailed data on environmental impact categories, such as energy, air emissions, water use, land use, material extraction and biodiversity (Wood et al. 2015). Global MRIO databases, such as EXIOBASE, allow for a linking of economic activities along global production chains to their upstream environmental and socio-economic impacts. These databases combine information on inter-industry trade within and across countries with final consumption, thus allowing for environmental footprint calculations. EXIOBASE is among those databases with the highest product/industry resolutions and the most detailed environmental impact categories. Other similar databases are EORA (Lenzen, Moran, Kanemoto, & Geschke, 2013), GRAM (Wiebe, Bruckner, Giljum, & Lutz, 2012), the OECD-ICIO (Nakano et al., 2009; Wiebe & Yamano, 2015) and WIOD (Timmer, Dietzenbacher, Los, Stehrer, & de Vries, 2015). and show where in the world CO2 was emitted while producing products that have eventually been consumed in Norway. The figures show a clear shift from Russia (in 1995) to China and India (in 2011).

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12 REMES 3*: Technology and fuel mix; approximate CO 2 factor 2*: Demand for each energy carrier TIMES EXIOBASE

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14 EXIOBASE is used for the subsequent environmental footprint analysis considering changes in Norwegian consumption and production patterns as determined by REMES. As EXIOBASE in itself is a static system, the changes of the REMES projections up to 2030 are implemented in EXIOBASE. These changes include intermediate demand relations including energy technologies, final demand, imports and exports, energy use and associated emissions. This is possible as REMES is based on the EXIOBASE tables for Norway, thus making sure that both models are using a consistent database. The global economic development, including changes in demand, technology and trade (among the other countries), is modelled based on data from the IEA Energy Technology Perspective scenarios (IEA 2015). Projecting MRIO systems such as EXIOBASE is an involving task, but researchers from NTNU Industrial Ecology (Wood and Hertwich 2010, Gibon et al. 2015, Wiebe 2016) are among the few (maybe the only ones) who have succeeded in this task (see for another example of simplified regional models of de Koning et al (2016). In a first step, the changes in Norway s environmental footprints due to different policies regarding the CO 2 price of production in Norway are analyzed. The environmental footprints change with changing final demand in Norway, changing production structure and energy use within and outside Norway and changing imports from outside Norway. A production-side CO 2 tax is expected to shift energy use within Norway away from carbon-intense energy carriers towards low-carbon and carbon-free energy and possibly substitute carbon-intense production by imports. The footprint analysis with EXIOBASE will clearly show where in the world the CO 2 embodied in the final goods consumed in Norway is emitted. This shows both industries and countries/regions of origin of the emission, thus allowing policy makers to estimate not only the direct but also the indirect impact of carbon-pricing policies in Norway. In a second step, the consumption-based carbon footprints of Norway can be used to estimate the effects of implementing a demand-side CO 2 tax instead of or in addition to the production-side CO 2 tax. This would require to implement one additional loop in the linked model systems. EXIOBASE would not be used for a subsequent analysis, but, in every iteration of the REMES-TIMES model, provide information on the global CO2 footprint of consumption, which is then used to recalculate the associated taxes. These taxes then would cause a change in behavior, changing demand and production structure in REMES and TIMES.

15 Imposing a production-based CO 2 tax on production reflects in increased prices of products. Using the Leontief price model, we can estimate the effect that this price increase has on the price level of the products. Using household expenditure data from EUROSTAT and World Bank by income quantile, Tisserant et al (under review) have estimated Engel curves for the 200 products in EXIOBASE. These estimations give income elasticities for each country and each product. Interpreting the increase in prices as a reduction in disposable income, the elasticities can be used to re-estimate final demand spending of households by product.

16 Allan, C., & Kerr, S. (2016). Who s Going Green? Decomposing the Change in Household Consumption Emissions Balabanov, T. (2011). Overview and evaluation of models in use for M/A policy portfolios and selection the relevant for Promitheas /pdf/Climate_Mitigation_Adaptation_4_Zgjedhja_e_Modelit.pdf

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