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Energy Economics 23 2001 141᎐151
The impact of mitigating CO emissions on
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Taiwan’s economy
Tser-yieth Chen
U Ming-Chuan Uni
¨
ersity, Institute of Management Science No. 250, Chung-Shan North Road, Section 5, Taipei 111, Taiwan, PR China
Abstract
In this paper, a computationally multi-objective programming approach and a Leontief inter-industry model are used to investigate the impact of mitigating CO emissions on
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Taiwan’s economy. The estimated result shows that Taiwan’s GDP will drop 34 off the targeted GDP growth rate for the year 2000 and Taiwan’s economy will be seriously
weakened if annual CO emissions are stabilized at the 1990 level. When Taiwan maintains
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CO emissions at 128 of the 1990 level, then Taiwan’s economy will be able to show a
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5.37 average annual growth rate up to year 2000; a 157 CO emission level would mean
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a 5.92 annual GDP growth rate; and a 213 CO emission level for a 6.85 annual GDP
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growth rate. In addition, policy implications are presented in order to provide policy makers in economic planning. 䊚 2001 Elsevier Science B.V. All rights reserved.
JEL classifications: Q48; Q40
Keywords: Greenhouse effect; Interindustry analysis; Multi-objective programming
1. Introduction
There is growing concern that in increasing accumulation of carbon dioxide in the atmosphere is leading to undesirable changes in global climate, such as the
greenhouse effect. This has resulted in proposals to set physical targets for reducing emissions of CO . The Framework Convention on Climate Change
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FCCC was signed in Rio de Janeiro by more than 150 countries to promote
U
Corresponding author. Tel.: q886-2-2882-4564; fax: q886-2-2739-0533. Ž
. E-mail address:
cityrs930.cier.edu.tw T. Chen . 0140-9883r01r - see front matter 䊚 2001 Elsevier Science B.V. All rights reserved.
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T. Chen r Energy Economics 23 2001 141᎐151 142
international cooperation for achieving such reductions in June 1992. These countries officially addressed an international target to stabilize CO emissions at
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the 1990 level by the year 2000 among the 36 Annex I countries.
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The second Ž
. Assessment Report of the Intergovernmental Panel on Climate Change IPCC ,
approved in December 1995. It acknowledge that global CO emissions should be
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less than 50 of current levels in order to stabilize CO atmospheric concentra-
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tions, and that the Annex I countries should make an effort to limit and reduce their emissions within a given time frame. Furthermore, a legal grounding was
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agreed upon at the convention of parties COP III meeting in Kyoto, Japan, in December 1997, to acknowledge that global CO gas emissions should be reduced
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by 5.2 of 1990 levels among 38 industrialized countries. COP III also demanded that all developing countries should be included in CO emission reduction efforts;
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this will be discussed in the next COP IV. Basically, Taiwan must pay close attention to the issue of global environmental
change because the international trade plays a critical role on Taiwan’s economy. By the end of 1996, total CO emissions in Taiwan were 171 = 10
6
tons. Projected
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CO emissions in 2000 will reach 236 = 10
6
tons, which is 203 of the 1990 level
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Ž
6
. 116 = 10 tons . From 1990 to 2000, the average growth rate of CO emissions will
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be 7.1. This Taiwan government may initiate relevant policy actions in the foreseeable future to fulfill its global responsibility in reducing production of CO ,
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which contributes to the greenhouse effect. With this in mind, it is important to understand the current progress of advanced countries in implementing such policy
actions and to simulate the impact of domestic measures to reduce greenhouse CO2 emissions on Taiwan’s economy.
In this paper, we use a multi-objective programming to estimate the trade-off between GDP and CO emissions in Taiwan. In order to achieve this objective,
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relevant literature is first reviewed. A multi-objective programming coupled with an input᎐output model is constructed to evaluate the economic impact of reducing
CO emissions on the Taiwan economy as a whole. Empirical data are collected
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and various options for mitigating industrial CO emissions are simulated. Based
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on the simulation, policy implications are discussed and some suggested for the future research are recommended.
2. Literature review
