What's the best way to model tax credit?
(06-01-2021, 02:49 AM)Antti-L Wrote: Vehicles are usually modelled by processes where the capacity is the number of vehicles, the input flow(s) represent the energy consumption, and the output flow(s) represent the amount of v-km / p-km / t-km (possibly several flows according to travel distance).

FLO_TAX and FLO_SUB can be used for defining a tax / subsidy in proportional to any of the flows of a vehicle process. However, if the credit is related to a tax on vehicle purchase (investment), you can use NCAP_ITAX / NCAP_ISUB for defining an investment tax / subsidy per vehicle. And if it is related to an annual tax on vehicle use, you can use NCAP_FTAX / NCAP_FSUB (annual fixed tax / subsidy per vehicle). I think it is up to the modeller to decide which is the best way to model any such tax credits, but instead of adjusting the vehicle investment costs, I think would rather use NCAP_ITAX / NCAP_ISUB.

Hello! I have tried using NCAP_ITAX and the result was the same as the reference case. I was wondering whether it was caused by the way I introduced NCAP_ITAX in the model. Similarly, I imposed a CCS tax credit (which I used the FLO_SUB since it's based on the process) and nothing changed in the result. Will there be anything I need to change to make these tax credit policies correctly incorporated in the model? The first screenshot is for imposing tax credit for EVs, while the second one is for imposing tax credit for CCS techs depending on how much CO2 is sequestrated. One more thing I am not certain about is that for a tax credit, should I use a negative value when I use FLO_TAX and NCAP_ITAX, or I can use FLO_SUB and NCAP_ISUB as positive values. Thank you!

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RE: What's the best way to model tax credit? - by qzaus - 07-01-2021, 10:33 PM

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