Impact of Carbon Tax in the Energy System Development of Nepal and Thailand

Abstract CO 2 mitigation has become increasingly an important environmental issue for developing countries. This paper analyses the energy system development, the associated CO 2 and local pollutant emissions in Nepal and Thailand using the bottom-up cost-minimizing MARKet ALlocation (MARKAL) modeling framework under the base case and three different carbon tax scenarios during 2010-2050. Nepal’s energy system is dominated by biomass and is estimated to remain the same by 2050, however its share is likely to decrease from 84% to 35% during 2010-2050. A wide increase in the share of petroleum products and hydropower is expected in the energy system of Nepal by 2050. The power generation mix of Nepal would continue to remain hydropower dominant during the planning period, however there would be a small increase in the share of other renewables (i.e. solar and municipal solid waste) by 2050. For Thailand, this study found that the energy system would be driven by coal with the reduction in the combined share of oil and natural gas by 2050. Unlike Nepal, the power sector of Thailand is natural gas dominant, and would continue to remain the same throughout the planning period. Nuclear power generation is estimated to penetrate after 2035 and its share is estimated to increase from 3% in 2035 to 9% in 2050 under the base case. The transport sector is the major contributor in the total CO 2 emissions in Nepal while the power sector occupied the largest share in the total CO 2 emissions in Thailand in 2010. The transport sector in Nepal would continue to remain the major CO 2 emitting sector while the industrial sector in Thailand would be the major CO 2 contributor by 2050. Under the carbon tax scenarios, the majority of the CO 2 emission reduction would come from the residential sector in Nepal while that from the power sector in Thailand.