lundi 26 janvier 2015

Smog around Climate Change II: environmental economists should learn about the dimming effect


 Not only fighting air pollution differs from fighting climate change (see previous post November 21st, 2014), it could imply the reverse! China has never been so concerned with air pollution (Hong Kong starts being upset as well, see SCMP January 25th 2015)[1] and calls for actions have become even stronger since the “Apec blue”. General opinion seems to view this concern as being rather consistent with the fight against climate change and this is also what is suggested by the recent US-China climate agreement (November 12th, 2015). As we mentioned in our previous post, it is not that straightforward. In fact it may prove even worse than we thought!

There is now a growing literature on the “dimming” effect that had been observed in the period 1950s–80s:  the decline in surface solar radiation due to aerosol and particles pollution may have outweighed increasing atmospheric downwelling thermal radiation from enhanced greenhouse gases and effectively counteracted global warming (see Wild, 2012).[2]  Notably, such an effect was already reported in 2005 by European scientists in Nature[3]  and is particularly well-known for particles emitted through volcanic eruptions (see the figure below[4]).
A corollary is that too much aerosol removal generates a “brightening effect” that enhances climate change. Such an effect has been recently documented by O’Dowd et alii., 2013 that argue (they demonstrate the direct link between aerosol emissions, concentrations, and surface radiation) that the clean air policies might have resulted in higher temperatures.[5]  

 

Does this mean that we should not worry about pollution generated by fossil fuel since it generates both GHG and particles? It rather calls for more effort to fight climate change because IPPC predictions that do not account for the brightening effect underestimate future climate change. And it will be become worse. Consistent with the intuition, there has been a renewed dimming in China after a phase of stabilization during the 1990s (Wild, 2012). When looking at the air pollution, we can expect -and hope- that China now reduces efficiently air pollution, that will generate a significant brightening effect (note that this provides a fresh perspective on US-China agreements…) which enhances the need for GHG reduction.

 

In the meantime, the dimming effect is clearly ignored by economists. First, to my knowledge, they have never taken it into account explicitly. Second, they often consider that  fossil fuel use directly generates climate change (see van der Ploeg et alii., 2012 for instance,[6] or my work[7]).  It might in fact be crucial to distinguish between GHG and particles that both need to be reduced but affect climate change in opposite ways.

 

 

 



[1] South China Morning Post, “Every breath you take” January 25th 2015, Post Magazine. http://www.scmp.com/magazines/post-magazine/article/1689002/air-pollution-practical-tips-how-cope-it


[2] Wild, M. 2012: Enlightening Global Dimming and Brightening. Bull. Amer. Meteor. Soc., 93, 27–37 http://journals.ametsoc.org/doi/pdf/10.1175/BAMS-D-11-00074.1


[3]Meinrat O. Andreae1, Chris D. Jones & Peter M. Cox,  Strong present-day aerosol cooling implies a hot future Nature 435, 1187-1190 (30 June 2005) | doi:10.1038/nature03671


[4] Seminar by Prof. Johnny Chan at City University of Hong Kong,  January 9th, 2015, http://www.cb.cityu.edu.hk/cityseminar/past/20150109.html


[5] Colin O'Dowd, Darius Ceburnis, Aditya Vaishya, S. Gerard Jennings and Eoin Moran “Cleaner air: Brightening the pollution perspective?” AIP Conf. Proc. 1527, 579 (2013); http://dx.doi.org/10.1063/1.4803337
[6] Van der Ploeg R. and Withagen C. Is there really a green paradox? Journal of Environmental Economics and Management, Volume 64, Issue 3, November 2012, Pages 342–363


[7] Ayong le Kama A. and  Pommeret A., 2015 « Adaptation and mitigation are not enough : turning to mitigation abroad “https://drive.google.com/file/d/0B563l-M03kqnTU9pdlI1R2dQWmc/view?usp=sharing

mardi 20 janvier 2015

Green Growth for the Energy Transition (the French law on energy transition). Act II: survival without an appropriate ecological tax reform?

By Prudence Dato, prudence.dato@univ-savoie.fr, IREGE/University of Savoie (France).



Following the first release of notes (Act I) on the economic analysis of the French law on energy transition, we now focus on the first trouble that may hinder the green growth for energy transition in France despite its ambitious objectives.

Act II; scene 1: when the funding looks perfect

Banks, financial players and private sector are mobilized to support the green growth for energy transition, while public and local authorities are assumed to give incentives and send good signals[1]. Moreover, incentives through tax credit on renovation of buildings, adoption of clean energy, energy efficiency, etc. and through ecological loan (zero-rate loan or attractive interest rate) together with sensitization are proposed to promote the energy transition at individual level.  But is this sufficient to refrain from using polluting energies?

Act II; scene 2: but there is a lack of energy tax reform

The law on energy transition is claimed not to be punitive in the sense that it is silent on energy or carbon taxation. As economic agents are rational, they will always prefer to consume the type (clean or dirty) of energy that has a comparative advantage. In the absence of a dissuasive tax on the polluting energy (CO2 taxation), even though agents are offered many financial opportunities (as stated in the French law on energy transition) to adopt renewable energy, fossil fuels will still be cheaper and more attractive. Then, they will still have incentives to consume dirty energy and will still pollute. In this context, greenhouse gases (GHG) emissions will still increase[2]. Without the appropriate ecological tax reform, the French law on energy transition is only an empty box.

Act II; scene 3: hope can start: the 2014 energy tax reform

The French 2014 Finance Act introduced in January 2014 a carbon component in the "internal tax on consumption"[3]. This new carbon tax relies on household use of coal, heavy fuel and natural gas, according to carbon content. Referred to as the climate-energy contribution, this CO2 tax was set at €7/tCO2 in 2014 and will increase to €14.5/tCO2 in 2015 and to €22/tCO2 in 2016.

However, there exist some energy tax exemptions for energy-intensive companies subject to the EU ETS[4], road transport operators, airlines, etc.; which should be removed. Moreover, the ecological tax reform should be extended to other polluting goods and to polluting activities or sectors like transport, industries, waste, etc. Otherwise, the new energy tax reform is not enough to support the objectives of the energy transition.



[1] http://www.ambafrance-ro.org/IMG/pdf/plaq-nmte-parlementaires_gb.pdf?2183/064f66751c6ae7cea24ff5fd591bf0a4f7f94164.
[2] De Perthuis, C. (2013) ‘La «transition énergétique»: Les ambiguïtés d’une notion à géométrie variable.’ Working Paper N°21, P.10, Chaire d’économie du climat.
[3] Taxe intérieure sur la consommation (TIC) (in French)
[4] The European Union Emissions Trading System