Jacques Le Cacheux- French energy madrid june 2014_jlc

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Entre el 30 de junio y el 2 de julio de 2014 organizamos en la Fundación Ramón Areces (C/ Vitruvio, 5, en Madrid) un curso de verano en colaboración con la Universidad Complutense de Madrid sobre los retos energéticos de Europa ante el cambio climático. En estas jornadas, diferentes expertos analizaron la transición energética en Europa para cumplir las exigencias de los compromisos internacionales en materia de emisiones de CO2.

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Jacques Le Cacheux- French energy madrid june 2014_jlc

  1. 1. The French energy transition path: slow and singular Jacques Le Cacheux, UPPA/CATT, OFCE/Sciences Po, and Stanford University jacques.lecacheux@sciencespo.fr Fundacion Areces, Madrid, 30 June 2014.
  2. 2. Introduction  Energy transition in France is part of the broader European climate policy, with its “20-20-20” objectives for 2020. And more ambitious GHG emission reduction targets for 2030 (-40%) being discussed.  Energy transition was one of the prominent items of Hollande’s platform in the 2012 presidential election. But, except for a national debate in 2013, no decision has been made so far.  However, the 2015 Climate conference is to be held in Paris, and something had to be done before.  A draft law for energy transition has been made public last week, not very precise, nor very ambitious.
  3. 3. Introduction  France is on track with respect to the 2020 emission objectives. But success is mostly attributable to reliance on nuclear energy and, more recently, to very poor economic growth record.  Longer term objectives are ambitious: France has officially embraced the “factor 4” objective, i.e. to divide emissions by a factor 4, (reduce by 80% compared to 1990 levels) by 2050.  The energy transition law comes in a context were most economic instruments are either oriented in the wrong direction (electricity prices, taxes), or even abandoned (“ecotax”).  In the EU, carbon price is too low, and unpredictable.  Which policy tools should be used?
  4. 4. 1. French energy: initial situation  France consumes a little more than 150 Mn tep (2012), of which about 100 Mn tep of fossil energy, almost entirely imported, the annual bill being almost 70 bn €.  Electricity generation in 2014 is 75% nuclear, and 15% renewables.
  5. 5. 1. French energy: initial situation  France emits 360 Mn tons of GHG, representing 1.15% of global emissions.  Per capita emissions are relatively low: 5.8 tons (US: 16, Germany: 9.7, UK: 7.7, Italy: 6.3).  Two sectors are responsible for a large and increasing share of total French emissions: buildings (1/3) and transport (27%).
  6. 6. 2. Objectives
  7. 7. 2. Objectives
  8. 8. 2. Objectives
  9. 9. 2. Objectives
  10. 10. 2. Objectives
  11. 11. 3. Pricing problems
  12. 12. 3. Pricing problems
  13. 13. 3. Pricing problems
  14. 14. 3. Pricing problems
  15. 15. 3. Pricing problems
  16. 16. 3. Pricing problems
  17. 17. 3. Pricing problems
  18. 18. 3. Pricing problems
  19. 19. 3. Pricing problems
  20. 20. 3. Pricing problems Receipts from environmental taxation in EU countries, % of GDP
  21. 21. 4. Policy instruments for decarbonation  Command and controls: norms and standards: no easy way to model their effects, except through technical change. But rebound effect, if unaccompanied by a policy for carbon pricing.  Carbon pricing: ETS or carbon tax.  Subsidies to improve energy efficiency, and public expenditures for infrastructure.  In the new French law: tax credits for energy efficiency in housing, loans (5 bn €). And not much else.
  22. 22. Theoretical economic impacts of carbon pricing: Short run  Higher energy prices means lower purchasing power for households.  Strong distributional effects: antiredistributive.  Negative effect on overall demand.  Competitiveness and the risks of carbon leakages.
  23. 23. Theoretical economic impacts of carbon pricing: Longer run  Energy efficiency, substitution, sobriety: three distinct induced effects on energy consumption.  Production factor substitution: the relative price of energy and labor: the issue of the ‘double dividend’.  Induced technical change: difficult to model, but intuitively important.  Revenue recycling : determines the overall macroeconomic impact.  Example: switching from labor to carbon taxation.
  24. 24. Toward a better European carbon taxation  Fixing the ETS. This would imply a major change, to have a high enough and predictable carbon price. Insufficient because of coverage.  Harmonization of energy taxation. The directive, but politically difficult (unanimity).  European carbon added tax (ECAT). Single carbon price for all goods, not only energy. Would solve the problem of competitiveness and carbon leakages. But problem of technical feasibility on top of institutional feasibility (more than introduction of VAT?). Unlike carbon tariff, ECAT can prevent trade war because integrated tax system: no discrimination between domestic and foreign goods.

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