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CIREQ-CIRANO Workshop on Environmental and Natural Resource Economics

Kakali Mukhopadhyay, Étienne Billette De Villemeur

The CIREQ-CIRANO Workshop on Environmental and Natural Resource Economics is organized in collaboration with CIRANO and is joint with the economics departments of the universities of MontréalQuébec at MontréalMcGill and HEC Montréal.

The event is addressed to researchers and PhD students interested in natural resource and environmental economics.

*  Information on previous workshops can be found here.

WORKSHOP SITE

This event will take place in Hybrid mode.

In person UQAM, Pavillon J.-A.-De Sève, 320, rue Sainte-Catherine E., Montréal, QC H2X 1L7
Online : https://uqam.zoom.us/j/85833715790

SPEAKERS

Kakali Mukhopadhyay (McGill University)
An Economy-Wide Impact Assessment of Decarbonization policies in India
Abstract: In the face of climate change, it is essential for emerging and developed economies to prioritize both economic and environmental sustainability by implementing effective decarbonization strategies. India which is host to the largest populace in the world, has been pro-active in committing towards decarbonization targets. The Government of India recently announced the long-run target of achieving Net-zero emissions by 2070. In order to achieve a reduction of 1 billion tonnes of GHG emissions by 2030, the focus has been placed on the power and transport sectors, which make up 65% of the country’s total emissions. In the power sector, the target of 280 GW solar and 140 GW wind capacity by 2030 has been set while in the transport sector, the target of 30% share of Electric Vehicles (EV) sales and 20% Ethanol-blended (E20) petrol by 2030 and 2025, respectively has been considered. An economy-wide modelling framework has been adopted to study the macroeconomic impact of decarbonization policies. Results indicate that solar and wind energy have a minimal economy-wide contribution. However, the solid waste generation is significant, amounting to approximately 19.3 thousand tonnes of PV waste and 95 million tonnes from wind turbines, with the potential of recycling and reusing decommissioned materials to reinstall 5.6 GW and 4.8 GW solar and wind capacity, respectively. On the other hand, the transition to EVs and E20 blended petrol in the transport sector has a positive macroeconomic impact due to strong backward linkages with the rest of the economy. The implementation of decarbonization policies in the power and transport industries has the capacity to decrease greenhouse gas emissions by 34%, while also promoting sustainable economic growth. Addressing climate change comes with a financial burden in the short-to-medium term, which can be offset by investing in technology transfers, capacity building initiatives, indigenous manufacturing facilities etc. Yet, in the long term, the nation is projected to reap the rewards of both environmental sustainability and economic growth by pursuing alternative decarbonization pathways to achieve SDGs 7 and 13.

Étienne Billette de Villemeur (Université de Lille)
On the Impossibility to Comply with a Carbon Budget by the Means of a Carbon Tax
Abstract: We consider the optimum implementation problem when the energy streams from fossil fuels, i.e. from a non-renewable polluting resource. We assume that the resource is abundant enough for the sustainability problem consisting in GHGs accumulation rather than the limiting amount of resource. When there is a Carbon Budget (that is when there is a upperbound Z on GHGs accumulation which is lower than what would prevail if the whole resource is exploited), the (static) equivalence between carbon taxes and emissions permits is broken. More precisely, there is no carbontax scheme that will result in carbon-budget compliance in a dynamic framework. The (static) intuition behind this result is that, if energy is essential so that it’s marginal utility goes to infinity when consumption goes to zero (The Inada condition), the tax will be never high-enough to stop completely consumption. The (dynamic) explanation is that, to induce firms not to extract all the available resource, sooner or later, increasing subsidies will have to be implemented as to slow down the extraction by the promise of higher profits if it takes place at a later date. Therefore, a carbon-budget compliant environmental policy must be based on a system of permits. Although the dynamic allocation of tradable rights could in principle salve for the optimum implementation problem, there would be likely difficult issues to achieve actual implementation. Eventually, we argue that “tradable climate liabilities” as put forward by two of us in a previous paper (2019, Ecological Economies, 164) – by which users pay in.

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