Evaluating Impacts of Carbon Tax on Energy Transition Using Gaming Experiment

Nakadegawa Yuta, Suzuki Kengo

doi:10.32165/jasag.33.2_31

<p>The energy transition in a deregulated market is a kind of social dilemma in which the private benefit by continuously using fossil fuels conflicts the public benefit by promoting backstop energy with lower environmental damage. To encourage the energy transition under this dilemma situation, a carbon tax on fossil fuels is being implemented or considered around the world. This study experimentally investigated whether a carbon tax can increase the consumption of backstop energy, assuming the situation in which energy consumers repeatedly choose fossil fuels or backstop energy. Human participants played the multiplayer game simulating energy selection by consumers under three conditions: no carbon tax, low carbon tax, and high carbon tax conditions. Backstop energy consumption at the end of the game is higher in the low-tax and high-tax conditions compared with the no-tax condition. On the other hand, the backstop energy consumption in the first half of the game is lower in the conditions with taxes, indicating that the carbon tax delayed the beginning of the energy transition. These results suggest that a low carbon tax may act as an excuse to continuously use fossil fuels.</p>

Evaluating Impacts of Carbon Tax on Energy Transition Using Gaming Experiment

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