Assessing the Impacts of Introducing of Carbon Tax and Technologies for Road Transportation in Laos

Abstract

This paper applied the AIM/CGE [Laos] model to assess impacts of introduction CO₂ mitigation actions in the transport sector through the comparison for energy consumption, GDP growth and CO₂ emissions in Laos. The introduction of CO₂ mitigation actions/countermeasures (CMs) include carbon tax, electric vehicles (EV), biofuels, and subsidy. The model results of BAU scenario show the total final energy consumption will increase in 2050 by 123 %. By introducing EV and biofuels exogenously with carbon tax and subsidy, it is observed that the final energy consumption will reduce gradually in the long-term. GDP will gradually decrease with a loss of 1.9 % by 2050 in case of the countermeasures scenario comprising EV and biofuels plus carbon tax and subsidy policy. The CO₂ emission in BAU scenario will increase remarkably at a growth rate of 184 %. EV and biofuel plus carbon tax will result in 57 % decline of CO₂ emission in 2050, and the subsidy policy will lead to the greatest fall of CO₂ emission. Introduction of carbon tax alone in transport sector will not have any influence on household behavior for energy consumption in both short-term and long-term, resulting in no impact on CO₂ emission. Nevertheless, applying mitigation actions (EV and biofuel) plus carbon tax, and subsidy countermeasures can be a significant driver for influencing final energy consumption and CO₂ emission reduction. But introducing the mitigation countermeasures, except for carbon tax, will result in a gradual decline of the GDP growth in the long-term.