Preprint Article Version 1 Preserved in Portico This version is not peer-reviewed

Using Carbon tax to reach the US’s 2050 NDCs goals - A CGE Model of Firms, Government and Households

Version 1 : Received: 23 May 2023 / Approved: 25 May 2023 / Online: 25 May 2023 (10:39:12 CEST)

A peer-reviewed article of this Preprint also exists.

Yan, K.; Gupta, R.; Maheshwari, S. Using Carbon Tax to Reach the U.S.’s 2050 NDCs Goals—A CGE Model of Firms, Government, and Households. J. Risk Financial Manag. 2023, 16, 317. Yan, K.; Gupta, R.; Maheshwari, S. Using Carbon Tax to Reach the U.S.’s 2050 NDCs Goals—A CGE Model of Firms, Government, and Households. J. Risk Financial Manag. 2023, 16, 317.

Abstract

Our study shows how the United States government can achieve its goal of Nationally Determined Contribution (NDC) in 2025, 2030, and 2050 by reducing energy consumption through a pure carbon tax. To achieve its emissions reduction goals, it is necessary for the US to impose a long-term carbon tax that balances taxes on labour, capital, energy, and carbon. Therefore, in this study, through the two-layer CGE Cobb-Douglas model, the carbon tax rate is set while balancing the production and profit functions of government, businesses, and households. This study concludes that the carbon price will increase from US$ 0.4391/kg CO2 in 2020 to US$ 2.5671/kg CO2 in 2050 when the CO2 emissions reduction target is increased from 17% reduction in 2020 to 83% reduction in 2050 for the US.

Keywords

Carbon tax; Carbon tax and NDC; CGE Cobb-Douglas model; Carbon tax and the United States Government

Subject

Business, Economics and Management, Finance

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