Compare CO2 emission level to GDP of Thailand and others developing Asia countries. Estimate the structure of CO2 emission, GDP and energy price.

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2 Compare CO2 emission level to GDP of Thailand and others developing Asia countries. Estimate the structure of CO2 emission, GDP and energy price. Simulate the effects of carbon taxation. Evaluate the government policy.

3 Compare CO2 emission level to GDP of Thailand and others developing Asia countries.

4 CO2 emission and GDP Panel regression- fix effect model DATA 20 Asian developing countries between 1980 and Real GDP (1988) $USD per capita : taken from IMF. CO2 was measured in unit tons per capita : sourced from World Bank

5 Panel Data Estimation model: Δlog(CO2 it )= c + βδlog(gdp it )+ α i + γ t + log(ε it ) α i γ t = Country i fix effect = Time t fix effect

6 Regression Result

7 Country Fixed Effect Country Fixed Effect Bhutan India Maldives Indonesia Lao Pakistan Thailand Myanmar Nepal Fiji Bangladesh Papua New Guinea Malaysia Samoa Tonga Philippines Sri Lanka Solomon Islands China Kiribati

8 Even compare with other developing countries, Thailand seems to emit more CO2 relative to GDP

9 Structural Analysis of Relationship between CO2 and GDP

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11 Real GDP per capita (in 1988 Baht): sourced from office of National Economic and Social Development Board. Equations for the estimation are Δlog(GDP) t = α + β i Δlog(GDP) t-i + δ j Δ(CO2) t-j + log(ε) t Δ(CO2) t = γ + θ i Δlog(GDP) t-i + ρ j Δ(CO2) t-j + log(μ) t

12 VAR Model and Granger causality test

13 Regression Result ( t statistics in [ ] ) D(CO2) DLOG(GDP) D(CO2(-1)) ** [ ] [ ] DLOG(GDP(-1)) ** *** [ ] [ ] C * ** [ ] [ ]

14 Add Energy Price Index as exogenous variable Calculate Energy Price Index Check for unit root and co-integration Expect negative sign in both CO2 and GDP

15 Retail Prices Weighted Index

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17 Regression Result ( t statistics in [ ] ) DLOG(GDP) D(CO2) DLOG(GDP(-1)) *** *** [ ] [ ] D(CO2(-1)) *** [ ] [ ] C *** ** [ ] [ ] DLOG(ENPRICE) * * [ ] [ ]

18 Policy Simulation: Carbon Taxation

19 Policy Simulation: Carbon Taxation A carbon tax is an environmental tax that is levied on the carbon content of fuels. Carbon tax simulation based on previous VAR Model

20 Policy Simulation: Carbon Taxation GDP CO2 in future Energy Price Two Scenarios simulate future value of dependent variables, i.e. GDP and CO2 retail energy price can be manipulated though taxation Different value of GDP and CO2 arises between scenarios

21 Policy Simulation: Carbon Taxation Two taxation policies 1. Temporary Taxation 2. Permanent Taxation Each taxation policy has two scenarios 1. Status Quo : No government intervention 2. Alternative : 10% taxation in energy

22 Policy Simulation: Carbon Taxation Assumptions 1. Government can control energy price completely. 2. There is no structural break. 3. World energy price remain constant.

23 Temporary Carbon Tax

24 Policy Simulation: Carbon Taxation

25 Policy Simulation: Carbon Taxation

26 Policy Simulation: Carbon Taxation Eventually, both GPD and CO2 differences converge to zero. On average, 1 ton of CO2 emission reduction requires of GDP

27 Permanent Carbon Tax

28 Policy Simulation: Carbon Taxation

29 Policy Simulation: Carbon Taxation

30 Policy Simulation: Carbon Taxation At time 100, accumulated CO2 emission is declined by million tons with the expense of million Baht of GDP. Sacrifice ratio of Baht per 1 ton of CO2 reduction.

31 Policy Simulation: Carbon Taxation However, at time 50, this sacrifice ratio drops to Baht. CO2 reduction requires more sacrifice ratio in the future

32 Policy Simulation: Carbon Taxation

33 Policy Simulation: Carbon Taxation The simulation does not include the adaptation of economy to respond in an increase in retail energy price nor the purpose of tax collected.

34 Policy Evaluation

35 Policy Evaluation Thailand has adopted Kyoto Protocol in There have been a consider amount of campaigns regarding global warming and CO2 emission Government seems to have interests in reducing CO2 emission.

36 Policy Evaluation Added dummy variable as an independent variable. Δlog(GDP) t = α + β i Δlog(GDP) t-i + δ j Δ(CO2) t-j + σ 1 Δlog(EnPrice) + σ 2 DUM log(ε) t Δ(CO2) t = γ + θ i Δlog(GDP) t-i + ρ j Δ(CO2) t-j + ω 1 Δlog(EnPrice) + ω 2 DUM log(μ) t DUM2005 take value of 1 after 2005 and 0 otherwise.

37 Policy Evaluation D(CO2) DLOG(GDP) D(CO2(-1)) ** [ ] [ ] DLOG(GDP(-1)) ** *** [ ] [ ] C ** ** [ ] [ ] DLOG(ENPRICE) * [ ] [ ] DUM [ ] [ ]

38 Policy Evaluation Changing to DUM2006, DUM2004, DUM2003, and so on, (the coefficient starts to have value 1 since 2006, 2004, 2003 and so on, respectively.) has also led to insignificance of parameters. Past policies have proved to be ineffective.

39 Conclusion Compare to other Asia developing countries, Thailand is subjected to high CO2 emission relative to GDP. The VAR model confirms that there is two-way relationship between CO2 and GDP. The simulation results suggest that taxation requires more sacrifice in the future Past policies has no significant impact on the structure of CO2 emission

40 Further Suggestion Increase complexity of the model Computable General Equilibrium Model Include others greenhouse gases such as methane Problems of data collection

41 Thank You