Effects of Introducing a CO₂ Tax: The Case of Poland

Abstract

Actions to reduce CO₂ emissions are one of the main priorities of the European Union’s climate policy. The paper presents a CGE based analysis of the effects of introducing a CO₂ tax in Poland. Two scenarios are considered: in the first, the tax applies only to sectors with the highest emission intensity, while in the second it is extended to all sectors of the economy. The results indicate that industrial sectors based on fossil fuels - electricity, gas and heat production and supply (Section D) and transport (Section H) - are in the most adverse position, whereas low-emission industries have the potential to expand their output. Overall, the introduction of a CO₂ tax is expected to reduce GDP by 1.63%.