• Corpus ID: 52063590

Reducing CO2 Emissions in Malaysia: Do Carbon Taxes Work?

@inproceedings{Othman2014ReducingCE,
  title={Reducing CO2 Emissions in Malaysia: Do Carbon Taxes Work?},
  author={Jamal bin Othman and Masoud Yahoo},
  year={2014}
}

• J. Othman, Masoud Yahoo
• Published 2014
• Economics

In recent decades, global warming and its effects on climate change have become a major global concern. Malaysia has made a pledge to reduce voluntarily its CO2e gas emission’s intensity of GDP by up to 40 percent based on 2005 levels by 2020. One of the possible strategies to achieve this aim is to introduce a carbon tax. This paper simulates the potential economic and environment effects of a carbon tax by using the computable general equilibrium model with explicit energy and emission extensions. Both with and without compensation policy scenarios were considered in the simulation. Results suggest that there are possibilities for producers to substitute conventional fuel with other primary factors and particularly the greener fuel alternative. Malaysia's GDP is projected to decline only marginally, while substantial reductions in emissions can be realized. Further, a compensation policy which seeks to reduce the impact of indirect taxes on households’ welfare will have a small effect on carbon emissions while significantly mitigate the equity effects of the carbon tax.