Analysis on the energy pricing strategy with CO/sub 2/ tax and its effect on mitigation of CO/sub 2/ emission in total energy systems

Analysis of the effect of energy pricing strategy including CO/sub 2/ tax in an urban area, where total energy supply system is introduced, was performed. CO/sub 2/ tax has attracted much attention as a simple and effective measure to mitigate CO/sub 2/ emission, but the implementation of CO/sub 2/ tax may cause too much economic damage to energy consumers. In this paper, an energy pricing strategy, which includes implementation of CO/sub 2/ tax is considered to mitigate CO/sub 2/ emission more effectively with least economic damage. The effect of the strategy is evaluated by indexes of, (1) mitigation of CO/sub 2/ emission, and (2) economic profit or loss. Bottom-up energy models of consumers and suppliers were developed to calculate the energy supply and demand in the area. Both substitution elasticity and self-elasticity are considered in the models.