Fanny Henriet

Carbon Price and Optimal Extraction of a Polluting Fossil Fuel with Restricted Carbon Capture

Among technological options to mitigate greenhouse gas (GHG) emissions, Carbon Capture and Storage technology (CCS) seems particularly promising. This technology allows to keep on extracting polluting fossil fuels without drastically increasing CO2 atmospheric concentration. We examine here a two-sector model with two primary energy resources, a polluting exhaustible resource and an expensive carbon-free renewable resource, in which an environmental regulation is imposed through a cap on the atmospheric carbon stock. We assume that only the emissions from one sector can be captured. Previous literature, based on one-sector models in which all emissions are capturable, finds that CCS technology should not be used before the threshold has been reached. We find that, when technical constraints make it impossible to capture emissions from both sectors, this result does not always hold. CCS technology should be used before the ceiling is reached if non capturable emissions are large enough. In that case, we find that energy prices paths must differ between sectors reflecting the difference of social cost of the resource according to its use. Numerical exercise show that, when the ceiling is set at 450ppm CO2, the initial carbon tax should equal 52

The Economics of Climate Change Impacts and Policy Benefits at City Scale

/tCO2 and that using CCS before the ceiling is optimal.

A Stylized Applied Energy-Economy Model for France

Climate change has become a priority issue in global environmental governance and cities are important players. For over three decades, the OECD has been actively supporting member and non-member countries to design environmental policies that are both economically efficient and effective at achieving their environmental objectives.1 Through peer reviews of policy implementation, the OECD helps governments to improve their collective and individual environmental performance, through sound economic and policy analysis and dialogue on how to establish and to achieve climate change goals. Climate change has been on the agenda since the late 1980s at the OECD, where we provide a forum for countries to, discuss and develop a shared understanding of the key policy challenges as well as to assess performance and identify good practice in the design and implementation of climate policies. Today the OECD is actively working with governments to highlight the role of cities to deliver cost-effective policy responses to climate change. A number of projects at the OECD are advancing the understanding of the roles that cities can play to respond to efficiently and effectively to climate change. This report is one in a series under the OECD Environment Directorate’s project on Cities and Climate Change. The project aims to explore the city-scale risks of climate change and the local benefits of both adaptation policies and (global) mitigation strategies.

Assessing the Consequences of Natural Disasters on Production Networks: A Disaggregated Approach

We build, calibrate and simulate a stylized energy-economy model designed to evaluate the magnitude of carbon tax that would allow the French economy to reduce by a factor of four its CO2 emissions at a forty-year horizon. We estimate the substitution possibilities between fossil energy and other factors for households and firms. We build two versions of the model, the first with exogenous technical progress, and the second with an endogenization of the direction of technical progress. We show that if the energy-saving technical progress rate remains at its recent historical value, the magnitude of the carbon tax is quite unrealistic. When the direction of technical progress responds endogenously to economic incentives, CO2 emissions can be reduced by more than that allowed by the substitution possibilities, but not by a factor of four. To achieve this, an additional instrument is needed, namely a subsidy to fossil energy-saving research. The redirection of technical progress, which is a driver of energy transition, comes at a small cost in terms of the overall growth rate of the economy.

A Stylized Energy-Economy Model for France

This article proposes a framework to investigate the consequences of natural disasters. This framework is based on the disaggregation of Input-Output tables at the business level, through the representation of the regional economy as a network of production units. This framework accounts for (i) limits in business production capacity; (ii) forward propagations through input shortages; and (iii) backward propagations through decreases in demand. Adaptive behaviors are included, with the possibility for businesses to replace failed suppliers, entailing changes in the network structure. This framework suggests that disaster costs depend on the heterogeneity of losses and on the structure of the affected economic network. The model reproduces economic collapse, suggesting that it may help understand the difference between limited-consequence disasters and disasters leading to systemic failure.

The economics of climate change impacts and policy benefits at city scale: a conceptual framework

We build, calibrate and simulate a stylized energy-economy model designed to evaluate the magnitude of carbon tax that would allow the French economy to reduce by a factor of four its CO2 emissions at a forty-year horizon. We estimate the substitution possibilities between fossil energy and other factors for households and firms. We build two versions of the model, the first with exogenous technical progress, and the second with an endogenization of the direction of technical progress. We show that if the energy-saving technical progress rate remains at its recent historical value, the magnitude of the carbon tax is quite unrealistic. When the direction of technical progress responds endogenously to economic incentives, CO2 emissions can be reduced by more than that allowed by the substitution possibilities, but not by a factor of four. To achieve this, an additional instrument is needed, namely a subsidy to fossil energy-saving research. The redirection of technical progress, which is a driver of energy transition, comes at a small cost in terms of the overall growth rate of the economy. [ABSTRACT FROM AUTHOR]