34
The Economics of Climate Change Study for Colombia –
EIECC
Ana María Loboguerrero Sustainable Environmental Development
Deputy Directory
LEDS – First Meeting Belo Horizonte
January 19 and 20, 2012
Index
1. GREEN TAXES
2. DEMAND SIDE MEASURES
4. SUPPLY SIDE MEASURES
EVALUATION OF MITIGATION ACTIONS FOR
COLOMBIA
Objective
Assess the economic effects of the mitigation actions proposed by the World Bank Study taking into account the interrelated nature of the economic system.
Ø Changes in GDP growth
Ø Redistribution of the product within the sectors
Ø Changes in the demand and supply structure of the economy
• Two different categories for the mitigation actions
Ø Demand side management (changes in the consumption patterns)
Ø Supply side (changes in the structure of the different sectors)
Methodology
General Structure of the Model
CGE: Ø 15 economic sectors
• Three different energy sectors (gas, oil derivatives and electricity)
• Substitutability between capital and energy
Ø 1 representative household and 1 government
Ø Two categories of workers (skilled and unskilled)
Calibration of the Model
• Empirically calibrated to the Colombian Social Accounting Matrix of 2005
• Dynamically adjusted to the population, growth and investment series used in the study
Introducing Mitigation Actions
• Endogenous reduction using carbon taxes
• Changes in the structure of the economy changing parameters of the model (demand and supply side)
Projects Proposed in Low-carbon Study
• E n e r g y - e f f i c i e n c y measures: – Efficient lighting (changing
bulbs) – Cogeneration in the industry
• Agriculture and forestry – Aforestation programs – Productivity improvement in
some crops (coffee, rice) – Silvopastorile systems – Deforestation
• Energy measures: – Wind energy – Geothermal energy – Fuel switching
• Transport: – Electric vehicles – Extending BRT systems – SITP (integrated transport
system) – Improvement in the freight
transportation - Biofuels
Curva MAC Agregada
Green Taxes GREEN TAXES (discourage the activities that
generate GHG emissions)
ü Using a cost-benefit analysis of the measure, an emissions objective curve is constructed for the sector.
ü The green taxes scheme incorporated in the model must reproduce such curve.
ü The green taxes scheme should reproduce some
desirable behavior in the economy: higher use of capital or labor with respect to energy.
Incorporation of mitigation s e c t o r a l s t u d i e s results Low Carbon G r o w t h Strategy L o n g R u n M i t i g a t i o n Scenarios
The measures for this sector seek for a more efficient and less polluted use of fuels (electric buses, trucks scrapping, BRT).
The emissions reduction of these measures is:
-10.00%
-9.00%
-8.00%
-7.00%
-6.00%
-5.00%
-4.00%
-3.00%
-2.00%
-1.00%
0.00% 2010
2015
2020
2025
2030
2035
2040
Mitigation Exercises – Green Taxes
TRANSPORT SECTOR
For this sector, there are three green taxes scenarios:
Even though, in each of the scenarios, a tax on the energy bundle (electricity and gas, and oil derivatives) is established, each of the scenarios has a different recycle mechanism:
– Scenario 1: No explicit recycle mechanism. – Scenario 2: Tax collection is used to subsidy capital demand. – Scenario 3: Tax collection is used to reduce labor taxes.
Mitigation Exercises – Green Taxes
SCENARIOS USED
Percentage difference with respect to GDP BAU scenario
-0.20%
-0.15%
-0.10%
-0.05%
0.00%
0.05%
0.10%
0.15%
0.20%
2005
2010
2015
2020
2025
2030
2035
2040
Escenario 1
Escenario 2
Escenario 3
Mitigation Exercises – Green Taxes
GDP
Percentage difference with respect to available income BAU scenario
-0.30%
-0.20%
-0.10%
0.00%
0.10%
0.20%
0.30%
2005
2010
2015
2020
2025
2030
2035
2040
Escenario 1
Escenario 2
Escenario 3
Mitigation Exercises – Green Taxes
AVAILABLE INCOME
Percentage difference with respect to unemployment BAU scenario (12%)
-0.50%
-0.40%
-0.30%
-0.20%
-0.10%
0.00%
0.10%
0.20%
0.30%
0.40%
0.50%
2005 2010 2015 2020 2025 2030 2035 2040
Escenario 1
Escenario 2
Escenario 3
Mitigation Exercises – Green Taxes
UNEMPOYMENT
Percentage difference of country total emissions with respect to the ones in the BAU scenario
-0.35%
-0.30%
-0.25%
-0.20%
-0.15%
-0.10%
-0.05%
0.00%
0.05%
0.10%
0.15%
0.20%
2005
2010
2015
2020
2025
2030
2035
2040 Escenario 1
Escenario 2
Escenario 3
Mitigation Exercises – Green Taxes
TOTAL CO2 EMISSIONS
The carbon productivity is the number of tones of CO2 used to produce one unit of output
-4.50%
-4.00%
-3.50%
-3.00%
-2.50%
-2.00%
-1.50%
-1.00%
-0.50%
0.00%
0.50%
2005 2010 2015 2020 2025 2030 2035 2040
Escenario 1
Escenario 2
Escenario 3
Mitigation Exercises – Green Taxes
CARBON PRODUCTIVITY IN TRANSPORT SECTOR
Scenario 1:
-1.60%
-1.40%
-1.20%
-1.00%
-0.80%
-0.60%
-0.40%
-0.20%
0.00%
0.20%
0.40%
2011
2016
2021
2026
2031
2036
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Mitigation Exercises – Green Taxes
SECTORAL GDP
Scenario 2:
Scenario 3: -1.60%
-1.10%
-0.60%
-0.10%
0.40%
2011
2016
2021
2026
2031
2036
-1.60%
-1.40%
-1.20%
-1.00%
-0.80%
-0.60%
-0.40%
-0.20%
0.00%
0.20%
0.40%
2011
2016
2021
2026
2031
2036
minener mineral energe comerc transp
Mitigation Exercises – Green Taxes
Results must be compared to other sectors measures in order to assess if they are common.
A simultaneous analysis of different type of measures, could allow to understand how measures interact. In this way, it could be assessed if a portfolio of measures can generate a development path in which green does not imply less growth.
Mitigation Exercises – Green Taxes
SOME PERSPECTIVES
Mitigation Exercises - Structural Changes
Consumption goods as a set of production goods
Electric services
Electricity Appliances changing composition change in minimum requirements
DEMAND SIDE MEASURES
Mitigation Exercises - Structural Changes
DEMAND SIDE MEASURES
Energy efficiency measures
Bulbs substitution
Refrigerators substitution
Generate a reduction in electricity consumption
Change parameters that determine the minimum consumption for each good
Electricity expenditure
More efficient electric appliances expenditure
Bulbs Substitution
0,00%
20,00%
40,00%
60,00%
80,00%
100,00%
120,00%
1985
1989
1993
1997
2001
2005
2009
2013
2017
2021
2025
2029
2033
2037
Escenario base
Proporción gasto en electricidadProporción gasto en bombillos
0,00%
20,00%
40,00%
60,00%
80,00%
100,00%
120,00%
1985
1988
1991
1994
1997
2000
2003
2006
2009
2012
2015
2018
2021
2024
2027
2030
2033
2036
2039
Escenario bajo en carbono
Proporción gasto en electricidad Proporción gasto en bombillos
Efficient bulbs purchases (higher cost, less energy consumption)
0,00%
20,00%
40,00%
60,00%
80,00%
100,00%
120,00%19
8519
8919
9319
9720
0120
0520
0920
1320
1720
2120
2520
2920
3320
37
Escenario base
Proporción gasto en electricidadProporción gasto en bombillos
Bulbs Substitution
Sectoral GDP
Decreases Electricity GDP
Unemployment
GDP
Decreases Households electricity consumption
Increases Available income
Increases Other goods consumption
Increases GDP
Electric Vehicles
Ø Reduction in the minimum requirements parameter of:
• Fuel consumption
Ø Increase in the minimum requirements parameter of:
• Machinery (vehicles and charging points)
• Electricity • Commerce (operation and
maintenance costs)
Ø Substitution of electric vehicles
for fuel vehicles • More expenditure on
transport equipment
• Reduction of fuel consumption and increase in the electricity consumption
Ø Increase in operation and maintenance costs
Ø Increase in expenditures on general manufactures, due to the charging points
Measure Model
Electric Vehicles
Minimum requirement changes (“γ”) of the consumption goods
Electric Vehicles
Sectoral GDP
Household consumption
Ø Sectoral GDP changes as a response to the changes in the consumption patterns of HH
Ø HH must reduce their expenditures in other goods, affecting sectoral GDP
Ø In the aggregate, the fall in GDP of some sectors is not compensated by the increase in GDP of the others, and so the national GDP is reduced
Ø The magnitude of the measure is small
-0.006%
-0.005%
-0.004%
-0.003%
-0.002%
-0.001%
0.000%
2005
20
07
2009
20
11
2013
20
15
2017
20
19
2021
20
23
2025
20
27
2029
20
31
2033
20
35
2037
20
39
National GDP
-0.02%
-0.01%
0.00%
0.01%
0.02%
0.03%
0.04%
0.05%
0.06%
0.07%
2005
20
07
2009
20
11
2013
20
15
2017
20
19
2021
20
23
2025
20
27
2029
20
31
2033
20
35
2037
20
39
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-0.30000%
-0.20000%
-0.10000%
0.00000%
0.10000%
0.20000%
0.30000%
2006
20
08
2010
20
12
2014
20
16
2018
20
20
2022
20
24
2026
20
28
2030
20
32
2034
20
36
2038
20
40
agrop livest forest pesca minener energe water manuf alim maquin constru comerc transp servic
Mitigation Exercises - Structural Changes
• Supply-side measures (sectors):
Ø New technologies for producing electricity (e.g. wind power) § Exogenous modification in the composition of the electricity sector
Ø Agricultural measures: change in the productivity and input demand composition of the sectors
Materials
Energy-Labor-Capital
Energy-Capital
Labor
Capital
Energy
Output
Changing composition of Energy-Capital bundle and changing its productivity
Differentiated types of energy § Changing the composition of
the energy bundle
• Gas • Oil derivatives • Electricity
Electric Buses: Fuel Switching
The elasticity parameter (ρE) controls the share of expenditure in each of the energy goods.
Measure: substitution of electricity for oil derivatives
Electricity and gas
Energy demand
Processed oil
derivative products
Structure Equation
Ø Find the appropriate elasticity to obtain the desired change in the respective shares
Electric Buses: Fuel Switching
The baseline assumption is that the urban transport s e c t o r d o e s n ´ t u s e electricity as an energy source for its buses. The measure proposed implies that in the final year (2040), a 6.9% of the expenditure in energy is on electricity
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2010
20
12
2014
20
16
2018
20
20
2022
20
24
2026
20
28
2030
20
32
2034
20
36
2038
20
40
Electricity
Oil
Ø The measure is introduced in the urban transport sector, which is just a fraction (15.23%) of the transport sector.
1.75 1.8
1.85 1.9
1.95 2
2.05
2010
20
12
2014
20
16
2018
20
20
2022
20
24
2026
20
28
2030
20
32
2034
20
36
2038
20
40
rho_E
Electric Buses: Fuel Switching
Sectoral GDP
Ø The substitution of electricity for oi l derivatives in the transport sector increases the demand for electricity and reduces the demand for oil derivatives.
Ø The reduct ion in the oi l derivatives sector reduces the intermediate demand of this sector for the other goods in the economy.
Ø There is a fall in all the sectors with the exception of the electricity sector.
National GDP
-‐0.0002%
-‐0.0002%
-‐0.0001%
-‐0.0001%
0.0000%
0.0001%
2005
2007
2009
2011
2013
2015
2017
2019
2021
2023
2025
2027
2029
2031
2033
2035
2037
2039
-‐0.0040%
-‐0.0020%
0.0000%
0.0020%
0.0040%
0.0060%
0.0080%
2005
2007
2009
2011
2013
2015
2017
2019
2021
2023
2025
2027
2029
2031
2033
2035
2037
2039
agrop livest forest pesca minener mineral energe water manuf alim maquin constru comerc transp servic
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